Forex News: Yen Falls Amid Rising Intervention Fears

Yen Falls Amid Rising Intervention Fears

(RTTNews) - The Japanese yen weakened against other major currencies in the European session on Thursday, as traders anticipate that a potential trigger for Tokyo authorities is likely to intervene in the currency market.

An additional risk element for short JPY positions is the possibility of a coordinated currency market intervention between the U.S. and Japan due to speculation. The agreement between US Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama to take action on currencies if needed raised anticipation of intervention and temporarily strengthened the Japanese yen.

Minoru Kihara, the chief cabinet secretary of Japan, also hinted that extreme fluctuations in the foreign exchange market would warrant proper action.

Due to the significant differences in interest rates between the Bank of Japan (BoJ) and the major central banks of the globe, the yen is still available everywhere. In this regard, the recent repricing of the U.S. Federal Reserve's (Fed) monetary policy stance-which is now focused on short-term monetary tightening-has only made the JPY weaker.

The summary of thoughts from the Bank of Japan's (BoJ) June meeting, which highlighted the need to speed rate hikes toward a level considered neutral for the economy, reflects the BoJ's continued orientation toward monetary policy normalization. Naoki Tamura, a board member of the BoJ, emphasized the significance of pushing the policy rate closer to the neutral level, which is thought to be approximately 2%.

Traders now await the release of the Fed's preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index, later in the day.

In the European trading today, the yen fell to a 3-day low of 161.90 against the U.S. dollar, from an early high of 161.57. The yen may test support near the 163.00 region.

Against the euro and the Swiss franc, the yen dropped to 2-day lows of 184.03 and 199.68 from early highs of 183.53 and 198.93, respectively. If the yen extends its downtrend, it is likely to find support around 185.00 against the euro and 200.00 against the franc.

The yen dropped to Wednesday's low of 213.55 against the pound, from an early high of 212.81. On the downside, 214.00 is seen as the next support level for the yen.

Against Australia, the New Zealand and the Canadian dollars, the yen edged down to 111.74, 91.44 and 113.77 from early highs of 111.38, 91.10 and 113.56, respectively. The next possible downside target for the yen is seen around 113.00 against the aussie, 94.00 against the kiwi and 115.00 against the loonie.

Looking ahead, Canada average weekly earnings data for April, U.S. core PCE price index for May, U.S. durable goods orders for May, U.S. GDP data for the first quarter, U.S. personal income and spending reports for May, U.S. weekly jobless claims data and U.S. Kansas Fed manufacturing index for June are slated for release in the New York session.

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