USD/JPY Rebounds to 157, Japanese Intervention Limits Gains
USD/JPY strengthened in the Asian session on Friday (May 1), continuing its rebound from the mid-155 area after briefly touching a two-month low. The pair briefly touched 157.55, but buying momentum appeared unsteady, and its gains remained vulnerable to containment.
The yen's weakening followed the release of softer Tokyo consumer inflation figures, giving the Bank of Japan room to remain cautious amid economic concerns related to Middle East tensions. Cooler data typically reduces the urgency for the BoJ to tighten policy, thus relieving some of the yen's support.
On the dollar side, a moderate rise supported USD/JPY. The combination of a slightly stronger dollar and a weaker yen explains the pair's upward movement, although the market does not yet appear eager to push for more aggressive gains.
However, intervention remains a key factor. Japanese foreign exchange diplomat Atsushi Mimura emphasized that Japanese authorities are in close communication with the US regarding the currency, countering speculation that Japan is ready to act if yen volatility is deemed excessive.
Technically, Thursday's sharp decline from the 160.75 area (the peak since July 2024) stalled around the 61.8% retracement level of the February-April rally, and USD/JPY has so far remained above the 200-day EMA. However, momentum indicators are said to be weakening (the RSI is around 40 and the MACD remains negative), leading the market to believe the downward pressure has not completely dissipated.
Under these conditions, USD/JPY's gains have the potential to remain "heavy" as long as the intervention issue and the unrecovered momentum limit follow-through. The market will monitor the combination of upcoming Japanese inflation data, the direction of the US dollar, and the intensity of communication/actions from Japanese authorities to determine whether the rebound continues or weakens again. (asd)
Source: Newsmaker.id
