Japan’s potential currency intervention and ample FX reserves limit upside for USD/JPY despite recent strength above 162.
USD/JPY remains rangebound near 162 as traders weigh the risk of Japanese intervention. Authorities have sufficient reserves to conduct over 15 interventions similar to those in April and May, dampening demand for long positions in the pair as a carry trade.
The currency pair recently breached the 162 level, opening a key battleground in the 162-164 range. While a weaker yen supports corporate profits, exports, and domestic investment, officials aim to prevent sustained moves above 164 to balance economic and political pressures.
Despite intervention risks, some analysts expect USD/JPY to trend higher over time, citing underlying fundamentals that may outweigh temporary market disruptions.