Yen Strengthens, USD/JPY Moves Away from the 160 Threshold
The Japanese yen strengthened modestly on Friday in the Asian session, pressuring USD/JPY, which fell around 0.15% and hovered around the mid-159 range. This correction halted a three-day uptrend, although the weakness remained limited, and the pair remained near its highest level since July 2024.
The yen's strengthening was primarily driven by concerns about intervention as USD/JPY reappeared near the 160 threshold, a level often used by Japanese authorities. A mild weakening of the US dollar helped support USD/JPY, although the market still believes there is little room for further yen appreciation.
The yen's weakness stems from energy fundamentals. The surge in oil prices due to the war risks worsening Japan's trade balance and depressing growth prospects. If oil rises again, imported inflation pressures could also increase, creating the risk of stagflation—a situation that would make it difficult for the Bank of Japan to continue policy normalization without stressing an economy already suffering from an energy shock.
In the US, the repricing of more hawkish Fed interest rate expectations continues to support the dollar. Concerns about energy inflation have led the market to see the possibility of higher interest rates remaining longer, thus holding back a USD/JPY correction, despite tactical support from the Japanese intervention issue.
Although President Donald Trump postponed an attack on Iran's energy infrastructure and extended the deadline for opening the Strait of Hormuz to April 6, the market remains wary of further escalation, which could keep oil prices high. Against this backdrop, the market is likely awaiting confirmation: a deeper decline to strengthen the correction scenario, or a breakout of the 160 level to resume the uptrend from the 152.30–152.25 area.
Source: Newsmaker.id
