ING’s Chris Turner argues that Japanese authorities likely intervened to push USD/JPY back below 160, repeating the 2024 pattern of significant FX sales in overdue April and early May. He expects investors to prepare for further action in the coming days and sees solid demand for USD/JPY near 155, while DXY is forecast to hold steady around 98.00-98.50.
Actions in Tokyo constrained USD/JPY gains
“We really should have seen this coming. USD/JPY was trading above 160 at the start of the global May Day holiday series, and just like in 2024, it looks like Japan has intervened again. In 2024, the Bank of Japan actually continued with $30 billion worth of FX sales plus sales on April 29, with another (smaller) round of intervention on May 1.”
“And that will mean investors will be bracing for potentially more intervention early next week, given further public holidays in Japan and around the world.”
“If Washington does not engage, we believe there will be strong demand for USD/JPY around 155 given high energy prices, hesitation in the BOJ tightening and the Fed being knocked off its easy path.”
“Yesterday’s sales may have amounted to $30 billion, plus healthy equity markets, which has led to an overall weakening of the dollar. Lower oil prices have certainly helped here, and there have even been suggestions that Tokyo may have intervened in oil futures markets as well.”
“DXY should continue to find support near 98.00 and may return to 98.50.”
(This article was created with the facilitate of an artificial intelligence tool and has been reviewed by an editor.)
