ING’s Chris Turner argues Japanese authorities likely intervened to push USD/JPY back below 160, echoing the 2024 pattern of sizeable FX sales around late April and early May. He expects investors to brace for more action in coming days and sees solid demand for USD/JPY near 155, while DXY is projected to hold firm around 98.00–98.50.

Tokyo action seen capping USD/JPY gains

"We should have seen it coming, really. USD/JPY was trading above 160 heading into the start of a series of global May Day holidays, and just like it did in 2024, it very much looks like Japan has intervened again. Back in 2024, the Bank of Japan did follow up its $30bn plus sales of FX on 29 April with another (smaller) round of intervention on 1 May."

"And this will mean investors will be bracing for potentially more intervention through the early part of next week, given further public holidays in Japan and around the globe."

"Unless Washington gets involved, we think there will be good demand for USD/JPY near 155, given high energy prices, hesitant BoJ tightening, and a Fed being blown off its easy course."

"What could have been $30bn of dollar sales yesterday, plus healthy equity markets, has seen the dollar weaker across the board. Lower oil prices have certainly helped here, and there has even been some suggestion that Tokyo might have intervened in crude oil futures markets, too."

"DXY should continue to find support near 98.00 and can gravitate back to 98.50."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)