Currency pair erased nearly half its losses as traders capitalized on lower USD levels following coordinated dollar-selling moves.
The US dollar fell sharply against the Japanese yen yesterday after Japan and South Korea conducted stealth interventions to sell USD. The move triggered volatile price action, with USD/JPY dropping before buyers stepped in to reverse nearly half the losses.
The interventions occurred amid month-end flows, amplifying market noise. Neither the Federal Reserve nor economic data drove the moves. Traders attributed the rebound to Japanese officials providing better entry points for USD buyers.
Focus now shifts to US CPI data and Middle East tensions, which could influence Fed rate expectations. The Bank of Japan kept rates unchanged today, with only one dissenting vote for a hike.