【Dollar-Yen cannot be assured even after the “rebound following intervention”; what to be aware of now is not the swing in yen depreciation, but its sustainability】

【Dollar/Yen: Not安心 even after a suspected intervention; what to focus on now is the durability of the momentum, not its strength】

In the current forex market, USD/JPY is once again moving in a nerves-wracking manner. Recently, after market volatility tied to expectations of yen-buying intervention by Japanese authorities, the dollar has shown a modest rebound, but the trend has not fully settled. According to Reuters, as of May 5 the U.S. dollar index softened somewhat on the background of hopes for Middle East ceasefires, while the yen gave up part of last week’s sharp rise. In the market, the view that last week’s yen-strengthening was driven by Japanese intervention remains strong, and USD/JPY is behaving more as a hunt for “what will be the next catalyst” rather than a clear direction.

A background factor not to be ignored is Japan’s forex intervention vigilance. Reuters reports, with sources, that USD/JPY moved toward around 160.7 yen after yen depreciation progressed to that level, and Japanese authorities began yen-buying intervention. Going forward, the Japanese government has shown strong vigilance against speculative yen selling, and the market remains aware that “the authorities may move again around the 160-yen area.” This is a factor that makes it hard to chase higher prices mechanically, even if the interest rate differential between Japan and the U.S. supports USD/JPY. Right now, USD/JPY is not only a trend market but also an event market where policy responses can swing prices significantly.160.7 yenEvent-drivenprice movements.

On the other hand, looking at the Bank of Japan’s monetary policy alone, it cannot be said that the environment makes yen purchases one-sided. At the April 28 meeting, the policy rate was left at 0.75%, but among the nine Policy Board members, three voted against the decision, favoring a hike to 1.0%. Reuters notes this as one of the most split judgments under the Ueda governance. In short, within the BOJ, inflationary pressures risk accelerating due to higher crude oil prices and Middle East tensions, while concerns about the economy and growth are substantial, so it is not a situation where the leadership can immediately move to a tightening stance in a unified manner. For markets, while April was held steady, the perception that “rate hikes are not off the table after June” remains, making yen-supportive factors and yen-negative factors both possible. This is a very delicate situation.0.75%three voted against the decision, favoring a hike to 1.0%

The U.S. side is also not in a mood to sell dollars outright. In its March 18 statement, the Fed noted that inflation remains somewhat high and the economic outlook remains uncertain, and that the impact of Middle East developments on the U.S. economy is unclear. Furthermore, Reuters reports that in the April meeting there was not only a hold on policy but also an unusually strong dissent regarding future “accommodation bias,” indicating continued internal uncertainty about the outlook. In other words, the United States is not in a position to decisively tilt to a dovish stance soon, and in terms of the U.S.-Japan interest rate differential, the dollar-yen support remains more likely.inflation remains somewhat high and the economic outlook remains uncertain

In this environment, what individual investors should focus on is not whether “the yen will continue to weaken,” but rather how long the catalysts will last. As long as intervention vigilance remains, there is a risk of sharp reversals during rallies. Conversely, if U.S. rate higher-for-longer expectations or Middle East tensions continue to support the dollar, downside may be limited. For now, it is important to narrow the focus to times of liquidity return such as London or early New York trading, and carefully assess whether news represents a temporary shock or meaningful material that could alter policy or rate outlook. The current USD/JPY regime is less about direction and more aboutdurability of catalysts, in what seems to be a more critical question than ever before.