• USD/JPY edged lower on Wednesday as yen edged higher on growing concerns that Japanese authorities could step into the FX market to curb excessive yen weakness.
• Traders remain cautious about the possibility of fresh FX intervention by Japan’s Ministry of Finance (MOF), especially with authorities continuing to monitor rapid yen weakness closely.
• Attention is also turning toward the Bank of Japan, after US Treasury Secretary Scott Bessent again commented that the BOJ should be allowed to continue raising interest rates, reinforcing market expectations for tighter Japanese policy.
• Many market participants in Tokyo now anticipate a 25 basis point BOJ rate hike in June, which would lift the policy rate to 1.0%, marking another significant step away from Japan’s ultra-loose monetary stance.
• Investors are increasingly debating whether a combination of direct FX intervention and further BOJ tightening could finally generate a more sustained recovery in the yen after months of heavy depreciation.
• Immediate resistance is located at 159.25 (May 19th high), any close above will push the pair towards 160.00 (Psychological level).
• Support is seen at 158.71 (May 19th low) and break below could take the pair towards 158.21(50%fib).
Recommendation: Good to buy around 158.60, with stop loss of 157.70 and target price of 159.30
