Japanese Yen Extends Rally as Officials Seem to Welcome Price Action

The Japanese Yen (JPY) continues to gain strength against major currencies in the European session on Thursday, building on its impressive rally from Wednesday.

The USD/JPY pair declined sharply during American trading hours on Wednesday and lost about 1% in less than 30 minutes, but there was no official confirmation of a currency intervention from either Japan or the US.

Despite this, the pair remains under persistent bearish pressure and trades at its lowest level in a month below 157.00 in the European morning on Thursday, losing more than 1% on the day.

Analysts at ING argue that both US and Japanese officials are likely content with the latest moves in the currency market, noting that 'US and Japanese authorities must be satisfied by yesterday’s price action and keen to encourage a sense of urgency for those long USD/JPY and EUR/JPY above 160 and 186, respectively.'

The stronger data backdrop and official tolerance for recent price action underscore the growing pressure on Yen bears, particularly those positioned in extended USD/JPY and EUR/JPY longs.