USD/JPY fell sharply into the 156-yen range yesterday, as remarks from the US and Japan warning against yen weakness and intervention concerns weighed on the market. Views have emerged that the pair will continue to hold firm over the longer term.
In the New York market, the dollar was sold temporarily on expectations of US-Japan warnings against yen weakness and easing geopolitical tensions, and USD/JPY plunged to 156.93. The move was reportedly driven by President Trump's remarks expressing concern over yen weakness and growing recognition among finance officials that the yen is undervalued and should be corrected.
During Asian trading hours, intervention concerns and interest-rate differentials are expected to remain in a tug-of-war. With trading in the 156-yen range as the baseline, attention is focused on the risk of a rate check or actual currency intervention by the government and the Bank of Japan, and it has been pointed out that intervention concerns will intensify if USD/JPY moves back into the 158-yen range.