USD/JPY was little changed after falling to 155.48 on Friday, following two days of Japanese action in the foreign exchange market that supported the Yen after it weakened beyond 160.00. The pair traded around 156.67.
Bank of Japan data on Friday showed Japan spent up to $35 billion, slightly below the $36.8 billion used in the July 2024 intervention. Attention then shifted towards upcoming US data releases.
Geopolitical Developments And Market Focus
Separately, Iran sent a proposal to Washington via Pakistan, while the US extended a blockade affecting Iran’s economy. Comments from Iran’s parliamentary speaker were also reported.
US ISM Manufacturing PMI for April was 52.7, unchanged from March. Three dissenters from Wednesday’s FOMC meeting set out their views, including references to oil-related inflation risks and uncertainty over the next policy move.
Japan’s calendar next week is described as quiet, while the US schedule includes Factory Orders, Fed speeches, ISM Services PMI, and April Nonfarm Payrolls. Markets are also monitoring broader energy and supply risks.
On charts, USD/JPY was near 156.72, below a simple moving average area around 158.59 and a descending line from 159.23. Support was cited near 155.21, with another level around 153.39, while RSI (14) stood at 37.
Strategy Considerations And Positioning
We are closely watching the yen as it tests familiar levels, remembering the heavy intervention we saw around this time in 2025. Back then, the Ministry of Finance spent nearly $60 billion over two days after the dollar broke 160 yen, a clear line in the sand. With the pair currently trading around 157.50, volatility options are looking increasingly attractive.
The divergence between the US and Japan is even more pronounced now than it was during the 2025 episode. The latest US Nonfarm Payrolls report for April showed a robust 243,000 jobs added, and core CPI remains sticky at 3.6%, keeping the Federal Reserve on high alert. This persistent interest rate gap makes selling the dollar a risky proposition, regardless of intervention threats.
Neel Kashkari’s warnings from the 2025 FOMC meeting about an oil price shock feel timely, as geopolitical tensions have pushed WTI crude back above $85 a barrel. This situation fuels the Fed’s hawkish stance and supports strategies that benefit from a stronger dollar. We should consider long oil positions as a potential hedge against the inflationary pressures he described.
Last year’s intervention pushed the pair down to the 155 level, which now acts as a key psychological support area for us. Given the strong US data and the risk of sudden intervention, buying USD/JPY call options with strikes above 159 seems prudent. This strategy allows us to profit from further dollar strength while capping our downside risk if Japanese authorities decide to act decisively again.
