A downside shift for the USD/JPY pair will not occur without anticipated Japanese intervention in the markets to prevent further collapse of the Japanese yen's price.

• At the end of last week's trading, the price of the USD/JPY currency pair unexpectedly declined to the support level of 150.82 after strong gains earlier in the week, which had reached the resistance level of 151.95.
• It then began this week's trading around the important level of 151.70, stabilizing.
• Obviously, this occurred ahead of the announcement of US inflation figures and the content of the minutes of the latest meeting of the US Federal Reserve.

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According to the platforms of Forex currency trading companies, the price of the Japanese yen rose to its highest levels in two weeks, as the Japanese authorities intensified their verbal interventions to stop the sharp declines in the price of the Japanese yen. For his part, Japanese Finance Minister Shunichi Suzuki repeated his warnings that the government would take appropriate measures to support the currency. For his part, Bank of Japan Governor Kazuo Ueda also said that the Japanese central bank could “respond with monetary policy” if the weakness of the Japanese yen affects the economy. Ueda added that inflation is likely to accelerate from “summer to fall” as higher wages lead to higher prices.

Meanwhile, former chief currency diplomat Hiroshi Watanabe said earlier last week that the government would likely not take any action unless the Japanese yen fell below 155 yen to the dollar. Clearly, the yen's recent weakness came amid speculation that the Bank of Japan's monetary policy will remain accommodative for some time despite the recent shift against negative interest rates.

The USD/JPY exchange rate seems to be under temporary downward pressure following the tough comments from Bank of Japan Governor Kazuo Ueda, which suggest the possibility of higher interest rate hikes. Also, Ueda said that the positive outcomes of the spring wage negotiations in Shunto will be reflected in wages during the summer and later in consumer price increases. In response, Lee Hardman, chief currency analyst at MUFG Bank Ltd, said, "The yen has also received support from the tough comments from Bank of Japan Governor Ueda."

Overall, what we are witnessing in all Japanese exchange rates is a period of short-term consolidation within a clear trend of weakness for several months. The question that matters to those monitoring the yen's price is whether we are finally seeing an end to this weakness before a clear rebound occurs. For the yen to overcome the crisis, investors must be convinced that the Bank of Japan will raise interest rates and narrow the gap between Japanese interest rates and those in other markets. For this to happen, Japanese inflation must approach levels higher than the Bank of Japan's central target of 2.0%.

Ueda seems confident that this is happening now. He said that achieving the 2.0% target sustainably is "on the horizon" and that the probability will increase "rapidly." Also, he suggested that interest rates could rise if his views are proven correct.

USD/JPY Technical Analysis and Expectations Today:

As we expected, the overall trend for the USD/JPY pair remains bullish as long as there is a clear contrast between the future of the US Federal Reserve's tight policy, supported by positive results of important US economic data, and the Bank of Japan, which still hesitates to tighten fully. A downside shift for the USD/JPY pair will not occur without anticipated Japanese intervention in the markets to prevent further collapse of the Japanese yen's price. If it does, it will mark the first breach of the psychological level of 150.00, and the next important downside shift will move towards the support level of 148.00. Ultimately, buying USD/JPY from each subsequent downside level remains preferable.

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