The Japanese yen continues to lose ground, with the USD/JPY pair approaching the key 150.00 level, as persistent selling pressure keeps the currency under pressure. A combination of dovish Bank of Japan (BOJ) policies, rising US yields, and strong risk appetite has contributed to the yen’s prolonged weakness, with little sign of a reversal in the near term.
The policy divergence between the Federal Reserve and the BOJ remains a key factor driving the yen’s decline. While the Fed has signaled that it will keep interest rates elevated for longer, the BOJ has stuck to its ultra-loose monetary stance, keeping Japanese yields near zero. This widening yield gap has made the yen less attractive compared to the US dollar, fueling steady outflows from Japanese assets.
Despite growing speculation that the BOJ may eventually shift its policy, market participants remain skeptical about any immediate changes. Japanese officials have hinted at a potential adjustment to yield curve controls, but the central bank has shown no urgency to tighten monetary conditions. This has left the yen vulnerable, with traders continuing to test the 150.00 resistance level in USD/JPY.
In addition to monetary policy, broad market sentiment has also played a role in the yen’s weakness. With global risk appetite improving and equity markets rallying, investors have been less inclined to seek safe-haven currencies like the yen. Instead, capital flows have favored higher-yielding assets, further weighing on Japan’s currency.
While verbal intervention from Japanese authorities has increased in recent weeks, actual intervention remains uncertain. The government previously stepped into the forex market when USD/JPY breached 150.00 in late 2022, but traders appear undeterred, testing the same levels once again. Unless the BOJ signals a more aggressive policy shift or intervenes directly, the yen may remain under pressure.
For now, USD/JPY remains on an upward trajectory, with traders eyeing whether the 150.00 mark will be decisively broken. As long as the interest rate gap between the US and Japan persists, the yen is likely to face continued selling pressure, keeping the pair near multi-decade highs.
