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Japan's top currency diplomat issues final warning before action in FX market

No comment on FX levelIn close contact with our US counterpartClosely coordinating with US based on our FX agreement in September last yearThis is my final warning before actionThe Japanese yen extended the gains following these comments from Mimura. Earlier we got a verbal intervention from Japanese Finance Minister Katayama. This is good news for JPY sellers as they get better levels where to enter from.As mentioned previously and as seen countless times in the past, interventions are useless if the fundamentals don’t change. What’s been weighing the most on the JPY this week were the dovish BoJ Governor Ueda’s comments as he noted that they want to take a little bit more time in gauging how the Middle East situation would affect Japan’s economy and acknowledged that underlying inflation is currently a bit below the 2% target.He added that they expect underlying inflation to be around 2% from second half 2026 but admitted that he doesn’t know how many months it would take to gauge timing of their next rate hike.So, you have the energy shock weighing on economic activity, a neutral BoJ, a dovish PM and other central banks getting more hawkish. There’s literally nothing supporting the upside for the JPY.
This article was written by Giuseppe Dellamotta at investinglive.com.

🔗 Source

💡 DMK Insight

The recent comments from Japanese officials are a clear signal that intervention is on the table, and here’s why that matters: The yen’s gains following these remarks indicate a strong response to currency fluctuations that could impact trade balances and inflation. With the US and Japan coordinating closely, traders should be on high alert for any sudden moves in the yen, especially if it approaches key resistance levels. If the yen continues to strengthen, it could pressure exporters and shift market sentiment. Look for the USD/JPY pair to test critical levels; a breach below recent lows could trigger further selling in USD. On the flip side, if the yen weakens again, expect a potential spike in volatility as traders react to intervention measures. Keep an eye on the next few trading sessions for any additional comments or actions from Japanese officials, as these could provide more clarity on their strategy. Monitoring the USD/JPY pair closely will be crucial, especially if it approaches the 145 level, which has been a psychological barrier in recent weeks.

📮 Takeaway

Watch the USD/JPY pair closely; a break below 145 could signal increased volatility and intervention risks from Japanese authorities.

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