We have seen increased weakness in the Yen to USD rate, which has pushed USD/JPY close to the record highs at 152 for the third time and this time we might see a break. The Bank of Japan is not looking to make any more moves now after raising interest rates last week, so the risk premium for the JPY shorts has been removed, leaving the Yen all vulnerable apart from direct intervention by the BOJ or the Japanese Government.

USD/JPY Chart Daily – Sticking to All-Time Highs

Yesterday the PM of Japan Fumio Kishida put a strong emphasis on coordinating closely with the BOJ regarding monetary policy adjustments. The mention of maintaining accommodating monetary conditions suggests a commitment to supporting economic stability and growth through monetary measures. He said that they continue to coordinate closely with the BOJ which implies that there may be interventions by the Bank of Japan to support the Japanese yen (JPY).

Verbal intervention, which involves policymakers making statements to influence currency exchange rates, has been observed in the past, but it has lost importance. But if such statements become more direct and intense, it could signal a more proactive approach to stabilize the currency such as an intervention, buying yen in the FX market. However, yesterday there was nothing to change the BOJ view, as inflation came in line with expectations, ticking lower.

Tokyo Core CPI for March

• Headline Consumer Price Index (CPI): Increased by 2.6% year-on-year (y/y) in March. This indicates a rise in overall consumer prices in the Tokyo area compared to the same period last year.
• Tokyo Core CPI Including Fresh Food and Energy: Decreased to 2.9% in March from 3.1% in February. This measure excludes volatile items such as fresh food and energy prices, providing a clearer picture of underlying inflation trends.
• Tokyo Core CPI Excluding Fresh Food: Remained unchanged at 2.4% in March, consistent with expectations. In February, this measure also stood at 2.4%.

USD/JPY Live Chart