Yen Bears Remain Cautious Amid Intervention Concerns, But Not Ready To Give Up Yet

The yen opened weakly on Monday and despite the lack of follow-through, remained within the range that it has been trading within for the past two weeks or so. The Bank of Japan (BoJ) is cautious about further tightening policy and risk sentiment remains, which continues to weaken the safe-haven value of the yen. That said, signs that the government may intervene in the market to address excessive declines in the currency are discouraging yen bears from making rash bets.

Meanwhile, the U.S. personal consumption expenditures (PCE) price index released on Friday did little to change expectations that the Federal Reserve (Fed) will begin cutting interest rates at its June policy meeting. This puts USD bulls on the defensive and limits the upside for USD/JPY. Traders now look ahead to this week’s key U.S. macro data, starting with the ISM Manufacturing PMI, for some impetus, although the focus remains on Friday’s nonfarm payrolls (NFP).

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