ING warns Japanese authorities may act as USD/JPY tests 162-163 levels amid thin US holiday trading conditions.
The Dollar held gains after the Fed’s hawkish stance, pushing USD/JPY into territory that risks Japanese FX intervention. The pair remains elevated near 162-163, a level where authorities have previously stepped in to stabilize the Yen.
ING strategists note this is not the start of a broader USD bull cycle but expect near-term strength as markets price in additional Fed hikes. Currently, 39 basis points of tightening are priced in by December, with potential for more if US data surprises.
Today’s US holiday creates a low-liquidity environment, increasing the likelihood of intervention. Focus shifts to upcoming Fedspeak and US data releases, which could drive further volatility in rates and FX markets.