The yen’s slide to its weakest against the dollar in four decades has left traders looking for Japan’s next line in the sand for the currency.
After dollar-yen broke through ¥162 on Tuesday, strategists increasingly pointed to ¥163 and beyond as the next levels to watch, arguing the Finance Ministry may tolerate a weaker currency than during its intervention campaign in 2024. A move to these new thresholds may be swift due to market positioning and U.S. payrolls this week, they said.
This underscores a shift in mindset among traders, driven by concerns the government could have come in harder with comments aimed at pulling the yen away from the weakest level since 1986. In a broader sense, the Bank of Japan’s historic unwinding of rock-bottom rates is also seen as far too gradual to reverse the currency’s deepening slide.
