The Japanese yen has once again weakened past 154 yen to the dollar, giving up last week’s gains even after top currency diplomat Masato Kanda said the government is ready to combat disorderly and speculative forex moves. However, Kanda declined to confirm whether Japanese authorities were behind last week’s suspected intervention when the yen rebounded by as much as 5.2% from its lowest level. Now, the USD/JPY exchange rate is stable around the resistance level of 154.60 at the time of writing.
Bank of Japan data indicates that it spent approximately $60 billion to defend the currency. Analysts said that the move only bought the Japanese authorities some time as market fundamentals remained bearish for the Japanese yen. US Treasury Secretary Janet Yellen also said interventions should be rare, and consultations should be held, indicating a lack of coordination between Japan and the United States on forex policy.
The dollar index has stabilized above 105 as investors assess the Federal Reserve’s monetary policy expectations. New York Fed President John Williams said rate cut decisions would be data-dependent, while Richmond Fed President Thomas Barkin expressed confidence that inflation will fall to 2% as the effects of higher interest rates take hold. The US economy added 175,000 jobs in April, below market expectations of 243,000.
The discrepancy between the US central bank’s strict policy and the Bank of Japan, along with speculation on the yen, will likely ensure that bulls control the performance of the USD/JPY pair. Resistance levels to watch for are 155.20 and 156.00, while support levels are 152.00 and 150.00.