Scotiabank strategists Shaun Osborne and Eric Theoret report that the Japanese yen remains weak, with USD/JPY steady but elevated at levels that have already surpassed those which previously triggered official intervention, such as price checking in January and direct intervention in late April and early May [1]. This ongoing depreciation has heightened concerns among market participants, government officials, and central bank policymakers, particularly regarding the potential for renewed intervention as authorities weigh the implications for inflation [1].
Looking ahead, the Bank of Japan is widely expected to implement a 25 basis point rate hike at its upcoming meeting on Tuesday, with markets also pricing in nearly one additional hike by December [1]. However, communication concerns have emerged as Governor Ueda will not be present, raising uncertainty about the central bank's messaging, especially during the post-meeting press conference [1].
From a technical perspective, Scotiabank sees limited resistance for USD/JPY up to the 162 level, with anticipated support in the 156–158 range [1]. The domestic economic calendar is described as empty ahead of the BoJ decision, leaving the market focused on the central bank's actions and statements [1].
CONCLUSION
The Japanese yen's continued weakness has raised the risk of intervention, especially as USD/JPY trades above previous trigger levels. With a BoJ rate hike widely expected and communication uncertainties present, market participants remain cautious about further yen moves and official responses.