The Japanese yen continues to decline against the US dollar, and earlier today reached a new 34-year low (156.82). Currently, the USD/JPY is trading at 156.60, with an increase of 0.61%, and traders are preparing for the fact that the Japanese authorities will intervene to support the national currency. The demand for options, which generate profits with a significant movement of the Japanese currency in any direction, is at its highest level since October 2022. Meanwhile, the weekly volatility of the USD/JPY pair has been growing for the fourth day and is approaching its maximum value in four months.
Japanese politicians have repeatedly warned of a rapid fall in the yen, and intervention risk based on past remarks from Masato Kanda, Japan's top currency official, is inching closer to the danger zone. The last time Japan intervened in the foreign exchange market was in 2022, first in September and then in October, to support the yen exchange rate.
Since the beginning of the year, USD/JPY has increased by 11%, and a sharp acceleration of this movement may force the Japanese authorities to intervene. In February, Kanda stated that a 10-yen move over one month against the dollar is considered rapid. The next catalyst that can cause a sharp movement of the yen is today's publication of US inflation data (at 12:30 GMT).