Dollar Finds Footing Against Yen as Interest Rates Rise

The US dollar pulled back slightly against the Japanese yen on Wednesday, but interest rates are picking up in the afternoon. This could provide some strength for the dollar and lead to a return of its trend line from the lows at the end of March.

Experts have mixed views on whether the Federal Reserve, US Treasury Department, Bank of Japan, and other institutions will continue to squash this pair or change their approach. One bank suggested that $2 billion wasn't enough to alter the trend, a view shared by Christopher Lewis, who notes that it's not the value of the yen but its rate of decay that's causing concern.

According to Lewis, paying attention to the 158-yen level is crucial as breaking above it could signal more buying. He has added a small position in this market and expects some sideways action followed by an eventual climb, similar to what happened after previous interventions.