Yen Near 34-Year Low Against Firm U.S. Dollar, Investors on Intervention Watch

The U.S. dollar remains firm against the yen, pushing the Japanese currency to a 34-year low. Investors are closely watching for potential intervention as they await key reports on U.S. inflation and the Bank of Japan’s rate decision.

The yen hit a low of 154.85 per dollar on Monday, the lowest level since the mid-1990s, and is currently hovering around 154.76. Traders are on high alert as the yen approaches the 155.00 mark, which could trigger intervention by Japanese authorities.

The Bank of Japan is set to release new inflation forecasts on Friday, with expectations that inflation will remain around the 2% target for the next three years. This could signal a potential interest rate hike later this year from the current near-zero levels.

The weak yen poses challenges for the BOJ, with speculation that the central bank may be pressured to raise rates sooner than planned to curb the currency’s decline. Finance Minister Shunichi Suzuki emphasized the need to address excessive volatility in the foreign exchange market.

Meanwhile, the U.S. dollar has seen broad-based strength, with gains of nearly 5% this year. Market expectations for a Fed rate cut have shifted, with a 46% chance of a cut in September and 42% in November, compared to earlier bets on a June cut.

Investors will be closely watching U.S. economic data this week, including first-quarter GDP and the PCE index, the Fed’s preferred measure of inflation. The outcome of these reports could impact the timing of a potential rate cut by the Fed.

In the cryptocurrency market, bitcoin is up 0.51% at $66,879.00. Overall, market dynamics are shifting, with implications for central bank policies and currency movements. Stay tuned for further updates on this evolving financial landscape.