Less than a month after suspicions arose regarding Japanese officials' intervention in the FX market, USD/JPY now approaches the 160 level that triggered the intervention. However, the upward movement has been gradual, lacking the volatility that initially prompted the officials' action.

With top-tier US data relatively subdued this week, it was widely anticipated that the dollar would perform well, given the market's preference for higher-yielding currencies during periods of low volatility.

The pair is currently trading above 157.00, having sharply rebounded from the 50-day simple moving average (SMA) earlier in May, followed by a move above 155.00. The persistent issue is likely to continue as long as the interest rate differential between the two countries remains significant, keeping the carry trade robust.

USD/JPY Edges Higher Once More but Moves Remain Measured

May 27 2024

1