In early European trading on Thursday, USD/JPY held steady around 160.45, reaching a high not seen in nearly 21 months. Traders seem to be adopting a wait-and-see method as Japanese officials are hesitant to intervene after the Japanese yen (JPY) surpassed a significant psychological level.
During the Federal Reserve’s policy meeting on Wednesday, it was decided to keep the benchmark interest rate unchanged, maintaining a range of 3.50% to 3.75%. The decision was notably divisive, with an 8-4 vote, marking the most contentious moment since 1992. Three officials dissented, arguing against any implication that the Fed might lean towards easing.
Fed Chairman Jerome Powell expressed concerns in a press conference about rising short-term inflation expectations. He also noted that he would remain on the board indefinitely beyond his current term. This hawkish stance on interest rates may bolster the US dollar’s position relative to the yen.
Later on Thursday, the U.S. preliminary GDP figures for the first quarter, along with the March Personal Consumption Expenditures (PCE) inflation report, are set to be released.
Conversely, the possibility of intervention by Japanese officials might strengthen the JPY and limit its upward movement. Japanese Finance Minister Satsuki Katayama underlined a “high sense of crisis,” citing concerns over speculation and the weakening yen amid rising tensions in the Middle East.
