Forex News: Yen Rises Amid Intervention Fears

Yen Rises Amid Intervention Fears

(RTTNews) - The Japanese yen strengthened against other major currencies in the pre-European session on Monday, due to rising speculation of possible Bank of Japan intervention in the foreign exchange market.

Japan's Prime Minister Sanae Takaichi cautioned against speculative actions on Sunday after the country's Ministry of Finance and the New York Federal Reserve (Fed) checked interest rates on Friday.

This gives a significant lift at the beginning of a new week and increases the likelihood of joint US-Japan intervention to stop any further JPY depreciation.

The JPY's safe-haven status is further supported by the Bank of Japan's (BoJ) hawkish stance and ongoing geopolitical uncertainty.

Traders remain cautious and are not taking any significant positions amid the latest geopolitical developments. Concerns of fresh war-threats in the Middle East increase after U.S. President Donald Trump confirmed a "big force" heading towards Iran.

Reportedly, U.S. forces are building up in the Middle East and when asked, Trump confirmed that a "big flotilla" is heading towards Iran.

A latest report showed a bigger than expected improvement in U.S. consumer sentiment. While the U.S. Fed is widely expected to leave interest rates unchanged at its monetary policy later in the week, traders are still likely to keep a close eye on the accompanying statement for clues about future rate cuts.

In economic news, data from the Cabinet Office showed that Japan's leading index improved less than initially estimated in November to the highest level in one-and-a-half years. The leading index, which measures future economic activity, rose slightly to 109.9 in November from 109.8 in October. In the flash estimate, the score was 110.5.

Moreover, this was the highest reading since May 2024, when the reading was 111.1.

Meanwhile, the coincident index dropped to 114.9 in November from 115.9 a month ago. The coincident index measures the current economic situation. The latest reading was revised downward from 115.2.

In the Asian trading today, the yen rose to nearly a 1-1/2-month high of 182.48 against the euro, more than a 1-month high of 210.21 against the pound and a 1-week high of 197.89 against the Swiss franc, from early lows of 184.09, 212.08 and 199.52, respectively. If the yen extends its uptrend, it is likely to find resistance around 180.00 against the euro, 205.00 against the pound and 195.00 against the franc.

Against the U.S., Australia, the New Zealand and the Canadian dollars, the yen advanced to nearly a 2-1/2-month high of 153.81, a 5-day high of 106.39, a 6-day high of 91.71 and nearly a 1-1/2-month high of 112.44 from early lows of 155.35, 107.32, 92.51 and 113.39, respectively. The yen may test resistance around 152.00 against the greenback, 104.00 against the aussie, 90.00 against the kiwi and 111.00 against the loonie.

Looking ahead, U.S. durable goods orders for November, U.S. Chicago Fed national activity index for October and U.S. Dallas Fed manufacturing index for January are slated for release in the New York session.

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