Recorded at 5:55 PM on June 17, the USD/JPY exchange rate pair was at 160.23 yen for 1 USD, down 0.20 points, equivalent to 0.12%.
Accordingly, the Yen is slightly strengthening against the USD. However, the 160 yen/USD level is still a high, showing that the Japanese currency is still under great devaluation pressure.
During the session, USD/JPY fluctuated in the range of 160.12 - 160.47. Compared to the 52-week high of 160.74 yen/USD, the exchange rate is currently only a short distance away. This makes the market continue to be cautious about the possibility that Japanese authorities will have to signal intervention if the Yen weakens further.
Looking at the short-term chart, USD/JPY had a decrease to near 160.10 in the previous session, then rebounded strongly to the 160.45 - 160.47 area. However, the upward momentum did not last long. From the short-term peak, the exchange rate gradually cooled down and returned around 160.20 at the end of the afternoon session.
This development shows that the market is struggling. USD buyers are not strong enough to push the exchange rate to completely overcome the 160.50 zone, while Yen buyers have not yet created a clear recovery momentum. In other words, the exchange rate is still hovering around the 160 mark, waiting for new signals from US monetary policy.
The focus now is the decision of the US Federal Open Market Committee (FOMC). Investors are monitoring whether the Fed will keep interest rates unchanged or send a tougher signal on inflation. If the Fed continues to emphasize inflation risk and maintains a high interest rate level, the USD may be supported, thereby putting more pressure on the Yen.
Conversely, if the Fed sends a softer signal, for example still leaving open the possibility of interest rate cuts in the near future, the USD may weaken. At that time, the Yen will have more opportunities to recover, at least in the short term.
On the Japanese side, the Bank of Japan (BOJ) has raised the policy interest rate to 1.00% as forecast. This is a step showing that the BOJ continues the process of normalizing monetary policy after a long period of maintaining very low interest rates. In theory, the increase in Japanese interest rates will support the Yen.
However, the market's reaction is quite limited. The reason is that the interest rate increase decision was predicted in advance, while the interest rate difference between the US and Japan is still large. When USD interest rates are even more attractive, investors still tend to hold USD, making it difficult for the Yen to increase sharply.
Technically, the 160.50 zone is a near resistance level for USD/JPY. If this zone is surpassed, the exchange rate may retest the 160.70 - 160.74 zone, corresponding to the recent highest zone. Further away is the psychological level of 161.00.
In the opposite direction, the 160.00 mark is an important support zone. If USD/JPY falls below this mark, the Yen may recover further, bringing the exchange rate back to around 159.50. This is the market area that has reacted in previous sessions.
In the short term, the Yen is likely to still fluctuate around the 160 yen/USD zone until the market has clearer information from the Fed. For people and businesses who need to monitor the exchange rate, the 160 mark is currently a very noteworthy zone, because as long as the USD continues to strengthen, pressure on the Japanese currency may quickly increase.
