Japan is maintaining a close watch on the yen, with its top currency diplomat, Mimura, reiterating that authorities remain concerned about the currency’s underlying moves and are prepared to respond if necessary.
Mimura said that Japan, the finance minister and the US have sent a clear message regarding the yen, highlighting the close coordination between the two countries. He also pushed back against concerns that funding constraints could limit Japan’s ability to conduct yen-buying intervention, saying he has “absolutely no such concern”.
The comments highlights that Japanese authorities continue to monitor the currency closely, particularly the impact of Japan-US interest rate differentials on market moves. Mimura said Japan is always carefully watching how trends in the two countries’ rates are affecting the yen.
He also highlighted the broader relationship between Japan and the US, describing their strong “currency alliance” as extending beyond foreign exchange to wider economic-policy cooperation and global supply chains.
Despite this cooperation, Mimura made clear that Japan is neither satisfied nor reassured by the underlying moves in the yen. The comments therefore reinforce the risk that Japanese authorities could become more active if yen weakness becomes disorderly or continues to move further away from levels they consider appropriate.
For markets, the key takeaway is that intervention remains firmly on the table, while Japanese officials continue to monitor both currency moves and the evolving US-Japan rate differential.
Zooming out, we can see USD/JPY is currently testing a strong support zone around the 156.50 level. We can expect the dip-buyers to step in around the support, with a defined risk below it, to position for a rally into the 160.50 resistance next. The sellers, on the other hand, will want to see the price breaking lower to extend the drop into the 155.00 support next.
This article was written by Giuseppe Dellamotta at investinglive.com.