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- USD/JPY holds steady near 160.45 in Thursday’s early European session.
- Fed held interest rates steady at 3.50%–3.75% on Wednesday; traders brace for the US Q1 GDP and Core PCE data.
- Japan’s Katayama said authorities are on standby to take decisive action against speculative currency moves.
The USD/JPY pair steadies near a 21-month high of around 160.45 during the early European trading hours on Thursday. Traders prefer to wait on the sidelines as Japanese authorities are on high alert for intervention after the Japanese Yen (JPY) breached the psychological level.
The US Federal Reserve (Fed) kept the benchmark interest rate steady in a range between 3.50% and 3.75% at the April policy meeting on Wednesday. The Fed’s 8–4 decision to leave the rate unchanged was its most divided since 1992, drawing three dissents from officials who no longer think the bank should communicate a bias towards easing.
During the press conference, Fed Chair Jerome Powell warned that near-term inflation expectations are rising, adding that he would stay on the Board of Governors for an indefinite period, even after his chairmanship ends. A hawkish Fed holding rates could provide some support to the Greenback against the JPY.
The preliminary reading of the US Gross Domestic Product (GDP) for the first quarter (Q1) and the Personal Consumption Expenditures (PCE) Price Index inflation report for March will be the highlights later on Thursday.
On the other hand, potential intervention threats from Japanese officials might underpin the JPY and cap the upside for the pair. Japanese Finance Minister Satsuki Katayama highlighted a “high sense of urgency” regarding speculative and weak-JPY moves driven by Middle East tensions.
