- USD/JPY falls slightly after intervention by Japan's currency chief Masato Kanda.
- The recent weakness of the Yen should be attributed to speculation and not fundamentals, Kanda said.
- The authorities could intervene to correct the situation, supporting the Yen.
The pair USD/JPY moves slightly lower near the 151.30 region at the start of the new week. The pair has lost ground after comments by Japanese currency chief Masato Kanda about possible intervention increased speculation that Japanese authorities will resort to market operations to shore up their currency.
Kanda, Deputy Minister of Finance for International Affairs, thus responded to the weakness experienced by the Yen, which remains at historic lows, following the Bank of Japan's (BoJ) historic decision to raise interest rates for the first time since 2007 at its monetary policy meeting from last Tuesday. The move seemed very unexpected, as rising interest rates are usually a factor that strengthens rather than weakens currencies.
“The current weakening of the Yen is not in line with fundamentals and is clearly driven by speculation“Kanda told reporters on Monday.”We will take appropriate measures against excessive fluctuations, without ruling out any option“he said, according to a report in the Japan Times.
When asked about the possibility of authorities engaging in direct intervention, or buying yen on the open market Kanda said: “We are always prepared“
The USD/JPY has reached a level, above 150.00, where the BoJ has historically been known to intervene to prop it up, as occurred in 2022, when the currency reached 151.95 against the US Dollar.
Data from the currency futures market seems to support Kanda's view. During the week of the BoJ's March meeting, speculators such as hedge funds actually increased their bearish bets on the Yen, according to data from the Commodity Futures Trading Commission (CFTC), despite widespread rumors that the BoJ was going to raise rates.
From a technical perspective, USD/JPY formed a bearish pattern (circled) on Thursday, suggesting increased risk of reversal and pullback in the near term.
US Dollar vs. Japanese Yen: Daily Chart
The combination of the fact that The pair has tested the level of the intervention highs of 2023 and 2022and at the same time has formed the bearish pattern, the possibility of a subsequent pullback increases.
Friday's red candlestick adds confirmation to Thursday's hanging man pattern, further increasing the odds of further declines.
However, candlesticks are only short-term reversal patterns, so the downward movement may be short-lived.
The continuation of the pullback could reach the support of the 50-day SMA located at 149,123.
On the other hand, a recovery and a clear break above 152.00 would suggest that the bulls are still in control and that the BoJ is reluctant or unable to intervene enough to move the exchange rate.
However, this move is unlikely to go much higher given the forces opposing it, with a possible target at the next round level of 153.00.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.