As USD/JPY approaches the 160.00 threshold, Japanese officials have intensified verbal intervention, though MUFG analysts warn that broad dollar strength makes reversing the current upward trend difficult.
The pair has rebounded toward 160.00 for the first time since the start of September, and Japan's top currency official Atsushi Mimura said overnight that the moves have been 'too fast', stepping up verbal intervention. This signals Japan is prepared to intervene again, which should limit further upside beyond 160.00, though MUFG notes the broad dollar strength from hawkish Fed repricing makes it difficult to reverse the upward trend.
Hawkish repricing of Fed rate-hike expectations has driven broad dollar strength, which is the main force pushing USD/JPY back toward 160.00. Even with Japanese verbal intervention, the dollar is expected to remain firm, potentially keeping pressure on non-USD yen crosses as well.
USD/JPY has climbed back toward the 160.00 level for the first time since early September, driven by a stronger US dollar and hawkish Federal Reserve rate-hike expectations. In response, Japan's top currency official Atsushi Mimura issued warnings that recent moves were too fast, signaling potential government intervention to support the yen.
USD/JPY has risen back toward 160.00, close to the levels before the joint intervention in late July/early August, and the top currency official says the past few days' moves have been too fast.
The signals suggest Japan is ready to intervene again, which should limit further gains in USD/JPY beyond 160.00, but the article notes it is difficult to reverse the upward trend while the US dollar strengthens broadly.
The article attributes the dollar's strength to expectations for faster Fed rate hikes, and notes this broad strength makes it hard for Japanese verbal warnings to reverse USD/JPY's upward trend.