Japanese Yen flat lines on suspected intervention, US NFP data in focus

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The USD/JPY pair flat lines around 157.00 during the early Asian session. The pair steadies following another intervention by Japanese authorities. Traders might wait on the sidelines ahead of the US April employment report, which will be published later on Friday.

USD/JPY holds steady near 157.00 in Friday’s early Asian session.
Suspected Japanese government interventions could support the Japanese Yen.
US forces intercepted Iranian attacks.

Japanese officials are suspected of spending around 10 trillion Yen in recent days to support the Japanese Yen (JPY). Japan’s top foreign exchange official Atsushi Mimura said on Thursday that authorities are prepared to respond on all fronts to speculative moves in the foreign exchange market. Mimura also declined to comment on FX intervention and specific currency levels.

Bloomberg reported on Thursday that US forces targeted Iranian military facilities responsible for launching attacks against warships transiting the Strait of Hormuz. US President Donald Trump said on Truth Social that US forces destroyed Iranian attackers and warned, “We’ll knock them out a lot harder and a lot more violently” if Iran doesn’t sign a deal soon.

Meanwhile, the Trump administration has been waiting for Iran to respond to its proposal to reopen the Strait of Hormuz and end the war. However, uncertainty in the Middle East remains high. Any signs of escalating tensions in the region could lift the US Dollar (USD) against the JPY.

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.