Japanese Yen loses another 0.15% against the USD today, reaching new highs at 161.700. Global market confidence in the Japanese currency is declining, as it has already lost 13.20% this year. At the same time, the yen is losing global recognition as a safe-haven asset during tough times. The nearly 40% devaluation against the dollar has been ongoing since early 2022, when the rate was just 115.000.
The Bank of Japan has been somewhat helpless recently, as interventions amounting to over 60 billion dollars in April proved to be short-term. Such a result certainly does not encourage policymakers to undertake similar interventions in the near future. As long as the interest rate differential remains substantial, the pressure on the yen will most likely continue. Moreover, Japanese officials have stated that they do not defend the currency at a specific level and usually intervene after sharp, rather than gradual, declines. According to Wells Fargo analysts, the Bank of Japan will hold off on potential intervention at least until the USDJPY pair reaches 165.
USDJPY (D1)
On the daily USDJPY chart, we can see an acceleration in the upward momentum recently. Before breaking above the multi-year upward trend line, we observed a rising wedge formation, which usually suggests a trend reversal. However, a relatively strong USD and weak JPY allowed the bulls to break higher and return to the upward trend channel from 2023.
Source: xStation 5
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