USD/JPY: Upside risks grow with intervention threat – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret note the Japanese Yen (JPY) is underperforming, with USD/JPY modestly higher and clearing the low 157s in thin holiday trade. Wider yield spreads and lingering intervention risk keep price action erratic. Analysts see the near-term balance of risk favoring further USD/JPY upside, with limited resistance until the 159.00 area unless fresh official action emerges.

Yen weak as market eyes 159.00

"The yen is entering Tuesday’s NA session with a modest 0.2% decline as it underperforms all of the G10 currencies in mixed overall trade."

"Price action remains erratic as market participants balance the intensifying headwinds of wider yield spreads against the ever-present risk of intervention."

"USD/JPY has cleared the low 157s and levels that (likely) prompted ‘price checking’ activity in the aftermath of last week’s intervention and local markets remain closed for holidays (reopening May 7)."

"The near-term balance of risk favors USDJPY upside absent either fresh ‘price checking’ from the BoJ or outright official intervention on behalf of the MoF."

"We see limited resistance between current levels and 159.00."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)