Senior officials from the Bank of Japan (BoJ) said on Thursday that a delay in stimulus adjustment amid high inflation risk could trigger an economic downturn.
Key quotes
Delay in stimulus adjustment amid high inflation risk could trigger economic downturn.
Suitable monetary policy would ensure stable inflation, place economy on sustainable growth trajectory.
When upside inflation risk high as is the case now, delay in adjusting degree of stimulus could materialise such risk, lead to economic downturn in future.
Market reaction
At the time of writing, USD/JPY is down 0.06% on the day at 162.09.
AUD/JPY gains ground to near 113.25 in Wednesday’s early European session.
The cross keeps a bullish vibe above the 100-day SMA, with RSI holding above the midline.
The first upside barrier emerges at 113.55; the initial support level is seen at 112.65.
The AUD/JPY cross trades in positive territory around 113.25 during the early European trading hours on Wednesday. The Japanese Yen (JPY) edges lower against the Australian Dollar (AUD) after reports regarding the Government Pension Investment Fund (GPIF).
Finance Minister Satsuki Katayama said on Tuesday that the government is considering nudging the world’s largest pension fund to buy domestic financial assets to support the currency, though concrete plans have yet to materialize. However, traders remain on alert for possible intervention from Japanese authorities, which might cap the upside for the cross.
Technical Analysis:
In the daily chart, AUD/JPY holds a near-term bullish bias as price extends above the 100-day simple moving average (SMA) and the 20-day Bollinger middle band, keeping the broader uptrend supported. The Relative Strength Index (RSI) at 56.23 sits in positive territory without entering overbought conditions, suggesting that buying pressure remains constructive but not overstretched.
On the topside, the next notable resistance is the upper Bollinger band, emerging around 113.55, where the current advance could start to face profit-taking. The next hurdle to watch is the May 14 high of 114.66. On the downside, initial support is seen at the 100-day SMA at 112.65, followed by the Bollinger midline near 112.35, while deeper pullbacks would likely be cushioned by the lower Bollinger band around 111.15.
USD/JPY stalls the previous day’s strong move up, though the downside seems cushioned.
Economic risks from the Mideast crisis and the wide US-Japan rate gap undermine the JPY.
Safe-haven buying and Fed hike bets favor USD bulls ahead of the US CPI and Fed’s Warsh.
The USD/JPY pair is seen consolidating the previous day’s strong move up and trading just below mid-162.00s during the Asian session on Tuesday. Spot prices, however, remain close to a four-decade top touched earlier this month, keeping traders on edge amid expectations of a possible intervention by Japanese authorities.
In the meantime, Japan’s Finance Minister, Satsuki Katayama, said that a change to the Government Pension Investment Fund (GPIF) asset allocation could be examined if the investment environment shifts sharply. This, in turn, lends support to the Japanese Yen (JPY). The US Dollar (USD), on the other hand, pauses after a two-day rally as bulls opt to wait for the release of the latest US consumer inflation figures and US Federal Reserve (Fed) Chair Kevin Warsh’s congressional testimony. This further contributes to capping the upside for the USD/JPY pair.
Meanwhile, a further escalation of tensions between the US and Iran, along with hawkish Fed expectations, might continue to act as a tailwind for the safe-haven Greenback. In the latest developments surrounding the Middle East crisis, US President Donald Trump on Monday reimposed a blockade of Iranian ports, and the US military launched a third straight night of strikes against Iran. In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) targeted US facilities in the region, while two UAE tankers were hit by Iranian cruise missiles in the Strait of Hormuz.
This adds to economic concerns amid Japan’s heavy reliance on imported oil from the Middle East and continues to undermine the JPY. Furthermore, a fresh leg up in Crude Oil prices reignites inflation fears and bolsters bets that the US central bank will raise borrowing costs by the end of this year. This could further widen the US-Japan rate gap, despite the recent Bank of Japan (BoJ) rate hike to 1%, or the highest since 1995, and keep the so-called Yen carry trade active. The fundamental backdrop keeps the USD/JPY pair close to a four-decade high and favors bulls.
The Japanese yen weakened to around 162 per dollar on Monday, giving back the previous session’s gains as escalating tensions in the Middle East pressured the currency. The US and Iran exchanged fresh missile strikes over the weekend amid ongoing disputes over shipping through the Strait of Hormuz, driving oil prices higher and reinforcing expectations of interest-rate hikes to curb inflation. Japan’s economy and currency remain particularly vulnerable to higher oil prices due to the country’s heavy reliance on crude imports from the Middle East. The yen also faced additional pressure from a stronger dollar, which continued to attract safe-haven demand amid the geopolitical crisis. Last Friday, the yen surged after Finance Minister Satsuki Katayama said the government would encourage domestic pension funds to increase their allocations to Japanese financial assets.
Recommendation: Trade: Short AUDJPY at market price Target: 111.36, 110.75 Stop: 113.06
Opinion:
Looking at AUDJPY on the H4 interval, one can see that the pair is trying to return to the main trend. Bulls did not manage to break above the key resistance at 112.66, and sellers took over. The aforementioned resistance is a result of an upper limit of 1:1 structure. According to the Overbalance strategy, as long as the price sits below it, one should expect the price to go lower. In addition, the price sits below the 200-period moving average which confirms the bearish sentiment. We recommend going short AUDJPY at market price with two targets: 111.36, 110.75 We also recommend placing a stop loss order at 113.06.
he yen strengthened on Friday following an announcement by Japanese Finance Minister Satsuki Katayama that the government intends to encourage pension funds, including the GPIF, to increase their investments in domestic financial assets — a move that many analysts regard as potentially more effective in supporting the currency than direct intervention. The market reacted with a sharp, though so far short-lived, rebound in USD/JPY from above 162 to 161.29, representing a move of almost 0.7 per cent.
Can pension funds sustain this reversal in the trend?
The key question traders are asking is: will the government actually bring about a structural change in the GPIF’s asset allocation, or is this merely verbal intervention without any real action? Today’s reaction can be described as a ‘knee-jerk reaction’, highlighting that the sustainability of further yen purchases requires concrete commitment, not just declarations. Since 2020, the GPIF has maintained a symmetrical 50/50 allocation between domestic and foreign assets, and as recently as March 2025, the fund confirmed that it has no plans to change this structure until 2030, which is indicative of significant institutional inertia.
Investors need to see concrete action, not just words, for the trend of a weakening yen to be reversed — including more aggressive interest rate rises by the BOJ, a reduction in the fiscal deficit, and a genuine change in the GPIF’s asset allocation. This does not alter the fact that even a slight ‘structural shift’ in the allocation would have a huge impact given the scale of the fund, whilst supporting the currency, bonds and shares. History shows, however, that the GPIF has already made radical shifts in its allocation (for example, in 2014 it reduced the share of domestic bonds from 60% to 35%, whilst increasing its equity holdings), so the scenario of a change is not unrealistic, but it requires a formal decision by the fund’s board, not merely a comment from the minister.
Kumiharu Shigehara, the former chief economist at the BOJ, offers a different perspective in the debate, warning that a weak yen is not a strength, but a warning sign — real wages in Japan have been falling for four years running, and the benefits of depreciation mainly go to exporters and asset holders, whilst households pay a higher price for imported energy and food. In his view, a sustained strengthening of the yen requires fiscal credibility, normalisation of monetary policy and productivity growth — not mere rhetoric or intervention.
Technical analysis of the USD/JPY chart
The USD/JPY daily chart shows a clear, long-term uptrend that has been in place since November 2025, with the price consistently holding above all three EMAs (50, 100, 200), which confirms the strength of the trend.
Short-term resistance: 162.825 — the high from recent sessions, from which the price has just rebounded lower following the news about the GPIF
Long-term resistance: 164,000 — the next target level should the trend continue
Key support: 160.520 — former resistance from March–April 2026, now acting as structural support, coinciding with the 50-period EMA (160.65)
The market reaction to Katayama’s comments shows a typical ‘sell the rumour’ pattern following a strong rally — the price is testing the resistance level at 162.825 and is being rejected back towards the support level at the EMA50/160.520, but this has not yet broken the main uptrend (higher lows since November).
Is the movement sustainable?
The answer is: probably not in the short term, unless the GPIF takes a formal decision to change its strategic allocation. Fundamental differences in interest rates between the US and Japan, geopolitical tensions surrounding Iran and Japan’s growing fiscal deficit are structural factors that continue to weigh on the yen, regardless of government statements. Until we see concrete steps — a genuine revision of the GPIF’s allocation, a more hawkish BOJ or progress in fiscal consolidation — Friday’s strengthening can be viewed as a technical correction within the USD/JPY uptrend, rather than a reversal of that trend. However, should a genuine change occur, the directional move could unfold very rapidly, given that investors have long been accustomed to the JPY’s tactical weakness against the USD.
USD/JPY attracts sellers for the second straight day as intervention fears lift the JPY.
The less hawkish FOMC Minutes weigh on the USD, contributing to the intraday fall.
The wide US-Japan rate differential and Iran risks should limit losses for the major.
The USD/JPY pair meets with a heavy supply during the Asian session on Friday and weakens below the 162.00 mark as traders remain on high alert amid expectations of a potential government intervention to prop up the Japanese Yen (JPY). Furthermore, some follow-through US Dollar (USD) selling turns out to be another factor exerting downward pressure on spot prices for the second straight day.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, drops to a fresh weekly low in the wake of the less-hawkish FOMC Minutes, which revealed that policymakers were divided with regard to the direction of interest rates. That said, traders are still pricing in around a 65% chance that the US Federal Reserve (Fed) will raise borrowing costs in September. This, along with persistent geopolitical uncertainties, could limit deeper losses for the safe-haven buck and offer some support to the USD/JPY pair.
In the latest developments, the US military unleashed a new wave of strikes against Iran earlier this week in retaliation for Iran’s attacks on commercial ships in the Strait of Hormuz. Iran responded by targeting American allies and bombing US military installations across Bahrain and Kuwait. Moreover, US President Donald Trump said on Wednesday that the memorandum of understanding with Iran aimed at ending the conflict in the Middle East was over. This keeps geopolitical risks in play and favors the USD bulls.
Meanwhile, investors remain worried about economic risks due to continued energy supply disruptions in the Strait of Hormuz, as Japan relies on the Middle East for over 90% of its Crude Oil imports. Furthermore, borrowing costs in Japan remain significantly lower compared to other Western economies, including the US. This might hold back traders from placing aggressive bullish bets on the JPY, warranting caution before confirming that the USD/JPY pair has topped out and positioning for further losses.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.13%
-0.16%
-0.39%
-0.09%
-0.06%
-0.38%
-0.24%
EUR
0.13%
-0.03%
-0.22%
0.04%
0.06%
-0.25%
-0.11%
GBP
0.16%
0.03%
-0.20%
0.07%
0.08%
-0.22%
-0.10%
JPY
0.39%
0.22%
0.20%
0.27%
0.30%
-0.04%
0.09%
CAD
0.09%
-0.04%
-0.07%
-0.27%
0.02%
-0.30%
-0.17%
AUD
0.06%
-0.06%
-0.08%
-0.30%
-0.02%
-0.32%
-0.21%
NZD
0.38%
0.25%
0.22%
0.04%
0.30%
0.32%
0.12%
CHF
0.24%
0.11%
0.10%
-0.09%
0.17%
0.21%
-0.12%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The Japanese yen strengthened past 161.5 per dollar on Friday, erasing all of its losses from earlier in the week as traders remained alert to the possibility of official intervention after the currency weakened to fresh 40-year lows. Market participants are now awaiting intervention data due later this month to determine whether Japanese authorities were behind the sharp but short-lived rallies seen in recent weeks. Investors also assessed data showing Japan’s producer prices climbed 7.1% in June, marking the fastest annual increase since March 2023 amid persistent cost pressures linked to the Middle East conflict and the yen’s sharp depreciation. Meanwhile, oil prices retreated after reports indicated that the US and Iran will continue peace negotiations despite a recent escalation in hostilities. That weighed on the dollar and Treasury yields while easing pressure on the yen by reducing import cost concerns for Japan, which depends heavily on Middle Eastern oil.
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