Markets price 50bps of Bank of Japan tightening by December, lifting intervention risks as USD/JPY tests 160 resistance.
The Japanese yen steadied near 160 per US dollar, with USD/JPY hovering below a key resistance level as markets brace for potential currency intervention. Scotiabank strategists highlight elevated risks of official action as the pair approaches the psychologically critical 160 mark, though bullish momentum persists above it.
Recent hawkish comments from Bank of Japan Governor Ueda, suggesting the policy rate remains below neutral, have fueled expectations of tightening. Markets now price 22bps of hikes for the next meeting and nearly 50bps by December, with technical indicators like RSI signaling continued upside potential for USD/JPY.
Intervention concerns dominate near-term sentiment, though strategists see limited resistance above 160. The yen’s marginal 0.1% gain against the dollar reflects stabilization rather than a broader reversal, as traders weigh policy shifts against currency volatility.