The Japanese Yen (JPY) is picking up against the US Dollar (USD) on Tuesday after hitting lows a few pips above the 40-year low of 161.95 on Monday.
The USD/JPY pair edges down by less than 0.1% on the day but remains within Monday’s trading range, with bears struggling to push the Greenback below 161.40
Traders seem to have trimmed Yen short positions amid speculation that the 1986 USD/JPY high, at 191.95, might be the new line in the sand for Tokyo authorities to step in. Fear of a joint US-Japan intervention These risks took shape earlier on Tuesday, following an online meeting between Japanese Finance Minister, Satsuki Katayama, and the US Treasury Secretary, Scott Bessent. The meeting boosted market speculation about a potential Tokyo-Washington coordinated action to support the JPY if the pair exceeds the mentioned 40-year high.
Katayama said that the discussion dealt with the situation in financial markets and failed to confirm if an intervention was on the table, but the timing of the meeting has raised the alarm bells. The fundamental backdrop, however, remains US Dollar-supportive. Recent US data and the Federal Reserve’s (Fed) rhetoric have prompted investors to ramp up bets on monetary tightening in the second half of the year.