The Japanese yen is continuing to weaken, with the USD/JPY trading at 161.66 in the North American session, marking a 0.16% increase for the day.
There are no significant Japanese events scheduled for today, but the US has already released the ADP employment report. Later in the day, the ISM Services PMI and FOMC minutes will be published.
Japanese officials are concerned about the yen’s persistent decline. Despite two brief winning weeks against the US dollar since March 11, the yen has dropped by 8.5% during this period. Japan has intervened in the currency markets twice, selling $61 billion to buy yen in an attempt to stabilize its value. However, these efforts have been short-lived, and the yen has reached its lowest levels in 38 years.
The large US/Japan rate differential, combined with the Federal Reserve’s reluctance to cut rates and the Bank of Japan’s hesitance to raise them, make it challenging for the yen to recover. Federal Reserve Chair Powell recently stated that inflation was on a “disinflationary path” and that more evidence of sustainable inflation towards 2% was needed before considering rate cuts. The FOMC minutes from the June meeting are expected to reflect this cautious stance.
On a technical note, USD/JPY is facing resistance at 161.76 and 162.06, with weak support at 161.52 and 160.98.
Overall, the future of the yen remains uncertain, with market expectations leaning towards a potential rate cut by the Federal Reserve in September.