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USD/JPY slips as investors weigh potential Japan intervention

The yen stays near a four-decade high zone, even after the Bank of Japan raised its policy rate to 1%, while Middle East supply worries lift oil prices and keep inflation concerns in focus.

Reported · Written up by our desk · Major Pairs

FXStreet reports USD/JPY edged lower on Friday, but traders stayed cautious, with some positioning around the possibility that Japan could intervene to support the Japanese yen.

The outlet links yen weakness to the wide monetary policy gap versus the United States, noting the Bank of Japan rate hike to 1%, still leaving borrowing costs exceptionally low compared with other major economies and potentially keeping the carry trade active.

FXStreet also points to geopolitical spillovers, saying US strikes against Iran completed another round Thursday, with retaliatory actions following across the region. It adds that energy supply concerns intensified, with crude rising to a fresh high since June 11 and shipping risks extending to another shipping chokepoint plus strikes on Saudi oil tankers in the Red Sea.

On the US side, the outlet notes that jobless claims fell to the lowest level since September 1969, reinforcing expectations that the Federal Reserve could raise borrowing costs by the end of the year, a backdrop that can support the dollar. FXStreet says traders are nevertheless holding back ahead of the next FOMC policy meeting, even as spot prices remained close to recent multi-decade highs.

Latest closeWTI crude $92.23 ▲6.2%|USD/JPY 163.84 ▲0.4%

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