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USD/JPY Forecast: Japan’s Intervention Dilemma Deepens as Fed Outlook Shifts
USD/JPY is once again trading like a rates differential story, particularly at the front-end of the curve. The relationship reasserted itself aggressively following the latest hot US inflation data, helping to explain why the pair is once again pressing up against levels where suspected intervention from Japan’s Ministry of Finance took place in recent weeks. But with markets starting to price the risk of Fed rate hikes as US inflation pressures reaccelerate and broaden, the bigger question now is whether Japanese authorities are willing to continue pushing back against fundamental forces that are arguing for a ... (full story)