Japanese yen drifting at 135

The Japanese yen has steadied on Monday, trading just above the symbolic 135 level.

Is 140 next for the yen?

The BoJ didn’t change its playbook at Friday’s meeting, and what is usually a dull affair had a huge impact on the yen, as USD/JPY surged over 2%. The central bank reiterated its commitment to an ultra-accommodative policy, despite pressure on the yen, which is wallowing close to 24-year lows against the US dollar. The BoJ’s reaffirmation of loose policy and its tenacious defence of its yield curve was all the more noticeable in a week that saw the Fed, BoE and even the SNB tighten policy.

The BoJ has been resisting attacks from bond speculators, who are betting that the Bank will release its cap of 0.25% on 10-year JGBs, but so far the BoJ has refused to blink. The Japanese yen has been bearing the brunt of this policy, with USD/JPY soaring around 17% since May 1st. With the Fed set to continue to raise rates, the US/Japan rate differential will continue to widen, which means the yen could be headed for 140 shortly.

The BoJ didn’t adjust its policy at the meeting but it was noteworthy that the policy statement added the exchange rate to its list of risks, something we haven’t seen in previous statements. . The Bank is sending a message that it is monitoring the exchange rate, but I question whether this will deter the markets from continuing to test the yen. The BoJ and Ministry of Finance have resorted to verbal intervention to fire warning shots to defend the yen, but so far Tokyo’s cannons have been firing blanks as Japanese officials haven’t shown any concrete signs that they plan to intervene in the exchange rate.


USD/JPY Technical

  • There is resistance at 1.3657 and 1.3814
  • USD/JPY has support at 1.3404 and 1.3247

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.