FX.co ★ Yen Rebounds Amid Intervention Fears

The Japanese yen strengthened nearly 1% toward 161 per dollar on Thursday before paring its gains, rebounding from four-decade lows as traders remained on high alert for potential currency intervention. The move followed a Reuters report suggesting Japan may stop telegraphing its intervention plans in advance, unlike ahead of the April 30 operation. This shift in strategy could make it more effective at catching traders off guard and forcing an unwinding of speculative short positions against the yen. The currency also drew support after Federal Reserve Chair Kevin Warsh noted that US inflation expectations had eased over the past month, indicating no immediate need to raise interest rates. Still, investors remain doubtful that the Bank of Japan will accelerate its pace of policy tightening, as it continues along a gradual normalization path. Ongoing carry trades and the wide interest rate differential between Japan and the US continue to exert downward pressure on the yen.