ING’s Francesco Pesole says recent pressure on the Japanese Yen followed concerns from PM Takaichi about further rate hikes and the appointment of perceived dovish Bank of Japan members, though ING does not see this altering gradual policy normalisation. The bank still expects a June hike to 1.0%. Short‑term, improved risk sentiment and softer Tokyo CPI keep JPY vulnerable, with 157.7–160 eyed for intervention risk.

BoJ path intact but yen still pressured

"The yen has come under pressure over the past couple of days after reports of PM Takaichi’s concerns about further rate hikes and the appointment of two Bank of Japan members (Ayano Sato and Toichiro Asada) who are considered dovish."

"Ultimately, the hawk-dove balance may not shift dramatically, and we believe economic data will remain the main decision driver. Government pressure on a central bank can be a wild card, but the obvious risks to the yen should markets price in loss of BoJ independence look rather undesirable for Takaishi’s government. Our BoJ call remains unchanged: a hike in June to bring rates to 1.0%."

"But in the short term, JPY’s outlook remains clouded. Improved risk sentiment is encouraging JPY short-building even more, and we expect a slightly faster-than-expected deceleration in tomorrow’s Tokyo’s core CPI to 1.6%, which could keep markets tempted to speculate on the dovish side."

"The 157.7, 9 February high may well be tested over the coming days – and a break higher would put FX intervention risk back on the radar. Still, there’s a good chance the Japanese authorities won’t pull the trigger until 160."

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