The market fears intervention on USD/JPY
The dollar to yen rate is consistently moving toward the level 162,0, which investors consider a significant risk threshold.
“Markets may gradually come to believe that the level 162.0 in the USD/JPY pair represents a new boundary below which currency intervention may occur. Combined with the dollar’s weakening, this could help explain yesterday’s intraday decline after the pair peaked at 161.95,” the analysts at ING Think said.
“Currently we expect that the 162–163 range constitutes a new intervention zone, though the pace and factors driving the next round of appreciation will determine its urgency and scale,” they added.
The potential for the yen to reach its weakest level against the dollar since 1986 occurs while the U.S. dollar strengthens, driven by a return to USD as a “safe haven.”
Monetary policy and geopolitical developments in the Middle East remain key factors influencing the USD/JPY rate.
Read more in the article: The dollar is approaching a key level. It hasn’t been seen in 40 years!
ING Think economists warn that potential currency market changes may occur alongside the Independence Day holiday in the United States, which will be observed next week.
“The end of next week presents an opportunity for a slight liquidity drop due to the U.S. holiday on July 4 (Saturday). If U.S. employment data released on July 3 proves strong, the Bank of Japan could indeed decide on a new intervention,” the report reads.
“Our forecast of the Fed’s dovish stance makes us more optimistic that a new currency intervention could have a more lasting negative impact on the USD/JPY rate, but choosing the right timing remains very difficult,” added.
The statement suggests that the market may still hold hawkish expectations toward Federal Reserve policy for several weeks.
Japan, however, according to experts, may be forced to carry out more than one intervention.
Also read: The dollar on a long path to 4 PLN? The expert issued forecasts for USD/PLN and EUR/USD. “The dollar may gain.”
Also see: Will the dollar surprise again? The expert issued a forecast for USD/PLN and EUR/USD. “It’s hard for me to believe there will be no more fires.”
Dollar to Japanese yen on Friday, June 26
The dollar to Japanese yen on Friday, June 26 is at 161,61 JPY.
Chart. Dollar to Japanese yen (USD/JPY)
Source: TradingView.
Also read: Dollar before a breakout chance? Expert: “Capital will flow back to USD.”
Also see: Dollar before a “nervous and dynamic” move, euro waiting to fall? Expert issued a forecast for USD/PLN and EUR/USD
Source: ING Think.
