The yen has breached its critical support level of 155 against the US dollar, as the dollar-yen pair plummeted to its lowest point in 34 years.
This decline has sparked concerns about potential intervention by Japanese authorities to support the currency.
Despite Japanese officials issuing warnings and market expectations of intervention at the 152 mark, the yen has continued its descent, hitting new lows.
Attention now shifts to Friday’s Japan’s upcoming interest rate decision. The Bank of Japan (BoJ) is expected to maintain its rates unchanged after its recent transition from negative territory in March, suggesting a potential policy shift.
BoJ Governor Kazuo Ueda underscores that the state of Japan’s economy might necessitate maintaining a loose policy in the near term. If the BoJ refrains from intervening, the yen may face further downward pressure.
Conversely, any hawkish signals from the central bank could strengthen the yen, pushing the dollar-yen pair below the 155 threshold, although a substantial yen recovery could be difficult due to sustained pressure from high US interest rates.
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