The Japanese Yen (JPY) has shown signs of strengthening against major currencies, notably the Euro and the British Pound, amid growing fears of intervention by Japanese authorities in the foreign exchange market. The USD/JPY pair remains elevated, trading around 161.30, its highest level since 2024 and well above the level that triggered an alleged intervention on April 30. Despite the Bank of Japan's (BoJ) recent rate hike to a 31-year high earlier this week, speculative traders continue to sell the Yen, anticipating that the US Federal Reserve may hike rates in the second half of the year. Japan’s Chief Cabinet Secretary Minoru Kihara reiterated that authorities are ready to respond to currency moves as needed, and Finance Minister Satsuki Katayama stated the government is prepared to take decisive action against speculative activity. These statements have heightened market expectations of intervention, especially during periods of thin liquidity such as the US Juneteenth bank holiday [1][4].
Technical analysis indicates that USD/JPY maintains a bullish tone, with resistance at 161.79 and the 40-year high at 161.95. The Relative Strength Index (RSI) is at 66.46, suggesting overbought conditions but not yet signaling exhaustion. The MACD remains positive, hinting at continued upside momentum. For EUR/JPY, the pair edged lower to around 184.45, with the daily chart showing a modest bearish bias and the RSI at 43. A close below the lower Bollinger band at 184.40 could open the door to further declines [1][4].
In the UK, Retail Sales data released by the Office for National Statistics showed a robust 1.2% month-over-month increase in May, reversing a revised 1.0% fall in April and surpassing the consensus estimate of 0.5%. Core Retail Sales also rose by 1.2% MoM, compared to a previous decrease of 0.1%. On an annual basis, Retail Sales grew by 3.2% in May versus 0.1% prior, and core Retail Sales jumped 4.6% against April’s 1.1%. Despite this upbeat data, the British Pound remained subdued, with GBP/USD trading around 1.3190 and GBP/JPY just below 213.00, as market participants remain cautious due to lingering domestic political risks and reduced expectations for Bank of England (BoE) rate hikes following softer inflation figures. The victory of Greater Manchester Mayor Andy Burnham in a parliamentary by-election added to political uncertainty, with Burnham calling the result a potential 'turning point' for British politics [2][5].
Minutes from the BoJ’s April meeting revealed that some board members advocated for swifter rate hikes to prevent underlying inflation from overshooting. BoJ Deputy Governor Himino indicated that further rate hikes are likely, depending on economic, price, and financial trends. This, combined with speculation about possible intervention to support the Yen, is expected to cap further recoveries in GBP/JPY and EUR/JPY [2][4].
Meanwhile, the USD/CAD pair hit a 14-month high of 1.4159, with the Canadian Dollar being the weakest against the Japanese Yen among major currencies. The USD/CAD pair remains in a bullish channel, though the RSI near 85 suggests stretched upside momentum. The broader market remains cautious amid uncertainty surrounding US-Iran peace talks, which have not yet commenced as planned, adding to the safe-haven appeal of the Yen [3][4][5].
CONCLUSION
The Japanese Yen is regaining strength against major currencies as intervention risks rise, despite the BoJ's recent rate hike. Robust UK Retail Sales data provided only limited support to the Pound, which remains pressured by political uncertainty and diminished BoE rate hike expectations. Market sentiment is cautious, with intervention fears and global political developments driving volatility in Yen crosses.