The yen remains the main source of movement in the currency market after Japan and the United States confirmed coordinated operations to support it. The market remains highly alert to the possibility of further action by the authorities, while the unwinding of large positions against the Japanese currency is strengthening demand for the yen. During the current session, this factor carries more weight than the dollar’s usual appeal in interest rate differential trades.

The Bank of Japan kept its short-term interest rate near 1%, although one board member supported an increase to 1.25%. The central bank also maintained the possibility of further tightening if inflation risks intensify. The interest rate differential with the United States continues to support USDJPY over the medium term, but following the confirmed intervention, it no longer provides the dollar with the same one-sided advantage.

Lower US Treasury yields and the broader weakness of the dollar are adding to the pressure. Strong US manufacturing data could trigger a recovery in the pair, so the scenario requires caution. However, while the risk of further official yen purchases remains, the priority stays with additional declines in USDJPY.

Trading idea: SELL 156.550, SL 157.200, TP 155.100