Yen Rebounds as Japan Almost Priced for 25bp Rate Hike

The Japanese yen has made a significant comeback, breaking below the 153.00-level for USD/JPY and reversing all losses since the US-Iran conflict began.

This upward momentum was reinforced after USD/JPY broke below important support at the 155.00-level, which had held earlier this year following intervention-driven yen gains in late April/early May and in late July/early August.

The bullish technical development has encouraged speculation that a bigger reversal of yen weakness could now be underway, supported by a change in fundamental drivers including the hawkish repricing of BoJ rate hike expectations.

Japanese Finance Minister Katayama stated that there has been no change in their currency policy stance, and they will continue to maintain close communication with the US Treasury and work to ensure an orderly foreign exchange market.