The USD/JPY pair experienced a slight retreat to around 160.25 during Thursday's Asian trading session, indicating a pause in its recent sustained upward trend. This pullback was primarily driven by market expectations of potential intervention by Japanese authorities, which prompted a cautious mood and led some long positions to take profits, resulting in a technical rebound for the yen.
Although no official intervention has been confirmed this week, the Japanese government has repeatedly issued warnings. Market surveys indicate that the Finance Minister has expressed serious concern about the yen's persistent depreciation and speculative activities, emphasizing the current situation's "high urgency." This statement is interpreted by the market as a precursor to potential intervention. Historical patterns suggest that Japanese authorities often act to stabilize the market when the exchange rate approaches key psychological levels, raising high alert as the rate nears 160.
On the monetary policy front, the Bank of Japan recently decided to keep its interest rate unchanged at 0.75%, aligning with market expectations. While BoJ Governor Ueda mentioned that future rate hikes are possible to address inflation, the market reaction has been relatively muted. This is because Japan's real interest rates remain in negative territory, indicating that the accommodative monetary environment has not fundamentally changed. Market analysts generally believe the current policy is insufficient to reverse the yen's long-term weakness.
In contrast, U.S. monetary policy remains tight. The Federal Reserve held rates steady in the 3.50%-3.75% range at its latest meeting, with the notable occurrence of four dissenting votes, a situation not seen in decades. The meeting statement noted that inflation remains elevated, partly due to rising energy prices. This backdrop has reinforced market expectations that high interest rates will persist for an extended period, thereby providing support for the U.S. dollar.
Furthermore, Fed Chair Jerome Powell stated during a press conference that he will continue to serve on the Board of Governors for some time and emphasized the importance of policy independence. Meanwhile, the market is conducting early assessments of the potential policy leanings of his speculated successor, Kevin Warsh, helping to maintain the attractiveness of dollar-denominated assets.
From a market focus perspective, investors are closely watching the upcoming release of U.S. first-quarter GDP price index and core PCE inflation data. Market expectations are for inflation to remain relatively high, which would further strengthen the case for the Fed to maintain its restrictive policy stance. If the data exceeds expectations, the dollar could strengthen anew, potentially pushing USD/JPY higher again. Conversely, weaker-than-expected data could exacerbate the current corrective move.
From a technical standpoint, the USD/JPY daily chart maintains a strong upward trend but shows signs of short-term consolidation near recent highs. The price had previously rallied consecutively, breaking through key levels at 158 and 160, and is now oscillating around the 160 mark. Immediate support levels are seen at 159.00 and 158.00; a break below these could lead to a further correction towards the 156.50 area. Key resistance levels above are positioned at 161.50 and 163.00; a break above these could signal a resumption of the upward trend.
On the 4-hour chart, the pair is exhibiting a corrective, consolidative structure with progressively lower highs, and short-term moving averages are beginning to flatten. The RSI indicator has retreated from overbought territory to a neutral zone, suggesting that upward momentum has weakened but has not yet formed a clear reversal signal. If the pair manages to stabilize above 160.80 again, upward momentum could be restored. However, if it remains under pressure below 160, the risk of a further correction increases.
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