Japanese Yen: Intervention risk high as 160 seen possible against US Dollar – ING

ING analyst Francesco Pesole points out that the Bank of Japan's rate check briefly caused USD/JPY to dip below 157.0. While the authorities may prioritize the speed of moves over a fixed level, ING still anticipates potential gains for the US Dollar against the Japanese Yen and views the 160.0 mark as consistent with the present circumstances, despite the high intervention risk.

Following a reported BoJ rate check on Friday, USD/JPY slipped under 157.0, implying that the Japanese authorities might be more concerned with the pace of adjustments rather than upholding a specific level. This strategy aims to deter market positioning and maintain cautious behavior. Nonetheless, the Fed has demonstrated a more hawkish stance compared to the Bank of Japan this month, leaving room for additional USD/JPY gains.

Consequently, a return to 160.0 remains a plausible outcome under the current conditions, although intervention risks persist. (This article was generated with the assistance of an AI tool and reviewed by a human editor.) The FXStreet Insights Team comprises journalists who select noteworthy market observations from respected experts.

The material includes insights from commercial analysts and contributions from both internal and external specialists. AUD/USD remains stable above 0.7100 in the Asian session on Monday as the US Dollar struggles to recoup its recent losses, which began near the highest level since late July, despite ongoing geopolitical uncertainties.

The PBOC's policy stability regarding Loan Prime Rates negatively impacts the Australian Dollar. However, expectations of another RBA rate increase continue to support the Australian Dollar ahead of the Trump-Xi Summit. USD/JPY is currently easing below 157.0 in Asian markets on Monday, hindered by a slight rise in the Japanese Yen following Friday's BoJ rate check.

Japanese holidays further heighten traders' uncertainty amid escalating geopolitical tensions in Russia-Ukraine and the Middle East. Consequently, the US Dollar pauses its decline, limiting USD/JPY's downside potential. Meanwhile, gold enters trading on the weak side, trading near $4,350 per troy ounce, driven by a stronger US Dollar and declining US Treasury yields across the curve.

Financial markets find themselves in an unusual situation as we approach the final weeks of Q3, with uncertainty and volatility prevailing, but oil prices are falling, and European and US stocks are expected to open higher later on Monday. Market concerns are primarily concentrated in sovereign bonds, with European and US yields experiencing another scare late on Friday and rising.

In July, the Bank of Japan (BoJ) increased its short-term interest rate target to 1.25% from 1.00%, reflecting a step towards normalizing monetary policy and aligning with expectations that had been circulating for weeks.