Japanese Yen recovers slightly vs. USD as intervention fears loom ahead of US PCE data

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USD/JPY attracts some sellers and snaps a three-day winning streak back closer to the YTD top.
Intervention fears prompt some JPY short-covering and weigh on spot prices amid a softer USD.
The downside seems limited as traders now await the release of the crucial US PCE Price Index.

The USD/JPY pair meets with some supply during the Asian session on Friday, and for now, seems to have snapped a three-day winning streak back closer to the 159.40-159.45 area, or the year-to-date high. Spot prices drop to the 159.00 mark in the last hour, though the downside potential seems limited.

The Japanese Yen (JPY) reached levels that prompted the so-called rate checks in January, fueling speculations that authorities would step in to stem further weakness in the domestic currency. This turns out to be a key factor exerting some pressure on the USD/JPY pair amid a modest downtick in the US Dollar (USD). Any meaningful depreciation, however, seems elusive, warranting some caution for bearish traders.

Given that Japan is one of the world's most energy-dependent nations, the recent surge in Crude Oil prices threatens to drive up consumer prices and weaken economic growth. This would create a classic stagflationary environment and further complicate the Bank of Japan's (BoJ) normalization efforts, which might hold back traders from placing aggressive bullish bets around the JPY and act as a tailwind for the USD/JPY pair.

The USD, on the other hand, might continue to draw support from reduced bets for near-term interest rate cuts by the Federal Reserve (Fed). Escalating Middle East tensions and the closure of the Strait of Hormuz remain supportive of elevated Crude Oil prices, fueling concerns about a war-driven surge in inflation. This could force the US Fed to delay cutting rates, which should support the USD and the USD/JPY pair.

Traders might also opt to wait for the release of the US Personal Consumption Expenditures (PCE) Price Index, later today, for more cues about the Fed's rate-cut path. This, in turn, might influence the USD price dynamics and provide some impetus to the USD/JPY pair. Nevertheless, spot prices remain on track to register gains for the fourth straight week and the supportive fundamental backdrop favors bulls.

Japanese Yen Price This Month

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this month. Japanese Yen was the strongest against the Euro.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		2.37%	0.93%	1.91%	-0.42%	0.29%	2.15%	1.44%
EUR	-2.37%		-1.41%	-0.48%	-2.73%	-2.03%	-0.22%	-0.91%
GBP	-0.93%	1.41%		0.98%	-1.33%	-0.63%	1.21%	0.50%
JPY	-1.91%	0.48%	-0.98%		-2.28%	-1.59%	0.22%	-0.46%
CAD	0.42%	2.73%	1.33%	2.28%		0.71%	2.56%	1.86%
AUD	-0.29%	2.03%	0.63%	1.59%	-0.71%		1.85%	1.14%
NZD	-2.15%	0.22%	-1.21%	-0.22%	-2.56%	-1.85%		-0.69%
CHF	-1.44%	0.91%	-0.50%	0.46%	-1.86%	-1.14%	0.69%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).