The USD/JPY pair rebounded to around 159.40 during Asian trading hours, extending gains from the previous session, but further upside may be constrained by potential intervention in the yen. Japanese Finance Minister Shunichi Suzuki stated that recent currency movements do not align with economic fundamentals, with significant deviations persisting. Suzuki noted that, considering the impact of exchange rates on people's daily lives, Japanese authorities are prepared to respond at any time, including possible intervention in the foreign exchange market. He emphasized that overall financial market volatility is notable, and this statement has heightened market concerns about intervention, thereby limiting the US dollar's short-term upside.
Akira Moroga, Chief Market Strategist at Aozora Bank, pointed out that Suzuki's mention of "decisive action" is among the strongest rhetoric, reinforcing market sensitivity to potential intervention. Teppei Ino, Head of Global Market Research at Mitsubishi UFJ Bank in Tokyo, indicated that although government officials may continue to issue verbal warnings, these comments are unlikely to substantially alter market sentiment in the short term. However, the USD/JPY pair could still approach 160 again, warranting caution against market volatility.
Brian Martin, Head of G3 Economics Research at ANZ, noted that the Bank of Japan (BoJ) is expected to keep interest rates unchanged at 0.75% this week but may signal a hawkish stance to address stagflation pressures from rising energy costs and a weak yen. Core inflation is gradually approaching the 2% target, and the central bank will guide monetary policy appropriately to achieve stable and sustainable inflation levels. Markets anticipate the BoJ will raise rates by 25 basis points at its April meeting, lifting the policy rate to 1.0%. The rise in USD/JPY is also influenced by Middle East conflicts pushing up oil prices, coupled with reduced expectations for near-term Federal Reserve rate cuts, which support dollar strength. According to the CME FedWatch Tool, the Fed is expected to maintain the benchmark rate in the 3.50%-3.75% range on Wednesday, marking the second consecutive pause following the previous easing cycle.
Overall, while the USD/JPY has short-term rebound momentum, its upside is limited by Suzuki's warnings and the BoJ's hawkish signals. Meanwhile, surging Middle East oil prices and the Fed's steady policy provide support for the dollar. Investors should monitor potential Japanese intervention, oil price fluctuations, and policy statements to gauge short-term market direction. The daily chart for USD/JPY shows the pair rebounding from recent lows, forming a short-term oscillating uptrend, currently consolidating near 159.40. Key resistance levels are at 159.80, 160.20, and 160.50; a break above could trigger accelerated short-term gains. Support levels are at 158.80, 158.40, and 157.90; a break below would increase the risk of a pullback. The 4-hour chart indicates short-term consolidation within the 159.20-159.60 range, with bullish and bearish forces temporarily balanced. Moving averages are flattening, and the MACD is hovering near the zero line, suggesting weak short-term momentum. Market focus remains on BoJ and Fed policy statements, Suzuki's intervention remarks, and Middle East oil price volatility, with short-term conditions likely to maintain a range-bound pattern.
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