Japanese Yen: Oil prices keep USD/JPY near 160 resistance - BBH
Brown Brothers Harriman’s (BBH) Elias Haddad explains USD/JPY has retraced half of its post-intervention drop, with US–Japan rate spreads already narrowing in favor of the Japanese Yen (JPY).
Brown Brothers Harriman’s analyst, Elias Haddad, has observed that the USD/JPY exchange rate has retraced half of its decline following intervention, with the Japanese Yen (JPY) now in a favorable position against the US dollar. The widening US-Japan rate spreads favor the JPY, and Haddad predicts there is potential for further compression.
The Bank of Japan’s (BoJ) policy rate is close to the lower end of its neutral range estimate (1.10%-2.50%), while the US Federal Reserve’s policy rate remains restrictive (assuming a neutral rate of 3.00%), with the US economy operating near its full potential. However, the main hurdle to Yen appreciation remains the sharp increase in crude oil prices.
As long as crude oil prices remain elevated, FX intervention can keep USD/JPY from rising but cannot compel a consistent decline. The next significant resistance level for USD/JPY is identified at 160.00. The article was generated with the assistance of an AI tool and reviewed by a human editor.
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