Japan’s warning of possible currency intervention tempers yen selling despite a widening US-Japan rate gap near 275 basis points.
The USD/JPY pair remains above 160.50 in early European trading, near its highest level since July 2024, as traders weigh potential Japanese intervention. Japan’s Chief Cabinet Secretary Minoru Kihara stated the government is prepared to act on exchange-rate moves, curbing aggressive yen short positions.
The Bank of Japan raised rates to 1.00% this week, its highest since 1995, but the move lags the Fed’s 3.5%-3.75% target range. The persistent rate differential sustains yen carry trades, supporting the pair’s uptrend above the 160 mark.
Technical indicators remain constructive, with the RSI in the low 60s and MACD above zero, though bullish momentum shows signs of moderation.