USD/JPY holds near 156.30 as intervention fears keep traders cautious

The USD/JPY pair traded without a clear direction on Thursday, hovering near the 156.30 mark as investors remained cautious over the possibility of another intervention by Japanese authorities in the foreign exchange market.

At the time of writing, the pair was down a modest 0.05% on the day.

Market participants largely stayed on the sidelines ahead of the closely watched US April employment report due on Friday, which could determine the next move for the US Dollar.

Japanese authorities keep intervention threat alive

The Japanese Yen found support after Japan’s top foreign exchange official, Atsushi Mimura, reiterated that authorities remain prepared to respond to speculative movements in the currency market.

Mimura stated on Thursday that officials were closely monitoring foreign exchange developments, although he refrained from directly commenting on potential intervention measures or specific USD/JPY levels.

His comments followed a series of recent warnings from Japan’s Ministry of Finance.

Finance Minister Satsuki Katayama last week repeated that Japan was ready to act against excessive speculative moves in the Japanese Yen.

The repeated warnings have kept traders alert following recent sharp swings in USD/JPY that were widely interpreted by markets as signs of official intervention.

BoJ minutes point to possible rate hikes

Meanwhile, minutes from the Bank of Japan’s March policy meeting released on Thursday revealed that several board members see the need for additional interest rate hikes if the energy shock linked to the US-Iran conflict continues to fuel inflationary pressures.

According to the minutes, some policymakers argued that the central bank should move toward adjusting its deeply negative real interest rates sooner rather than later.

The more hawkish tone from the Bank of Japan strengthened market expectations that another rate hike could come as early as June.

However, analysts remain cautious about the Japanese Yen’s longer-term outlook.

Many believe that monetary tightening from the BoJ alone may not be enough to provide sustained support to the currency unless accompanied by lower US Treasury yields or softer Oil prices.

Analysts see intervention risk near 158 level

Strategists at OCBC, Sim Moh Siong and Christopher Wong, said recent movements in USD/JPY appeared to carry the signature of Japanese intervention activity.

According to the strategists, the market’s key intervention trigger level now seems closer to 158 rather than 160.

They added that any further intervention measures could potentially push the currency pair back toward the 150–155 range.

However, they also noted that intervention alone would likely be insufficient to reverse the broader bullish trend in USD/JPY without a more aggressive policy stance from the Bank of Japan.

Focus shifts to US employment data

On the US side, investor attention has now shifted to Friday’s April employment report.

Economists expect the US economy to have added 60,000 Nonfarm Payrolls during the month, while the Unemployment Rate is projected to remain unchanged at 4.3%.

Markets are also awaiting the weekly Initial Jobless Claims data scheduled for release later on Thursday.

The US Dollar remained broadly under pressure, with the US Dollar Index trading near two-month lows around 97.90.

Investors continue to price in a more accommodative stance from the Federal Reserve, limiting the Greenback’s upside potential against the Japanese Yen.