Recent moves by the Bank of Japan are indeed worth close attention, as market expectations for an April rate hike have suddenly been revised sharply downward.

The data from overnight index swaps are very straightforward—within just a few days, the market’s estimated probability of the Bank of Japan raising rates in April has fallen from 50% to below 20%, and the contrast is quite striking. BOJ Governor Kazuo Ueda has recently mentioned that rising crude oil prices negatively affect Japan’s trade conditions; against this backdrop, pushing ahead with a rate hike is certainly becoming more difficult.

Looking at Reuters’ latest survey, economists’ views are also becoming divided. The probabilities of hikes in April and June are basically tied, at about 35–38% each. Some believe June is the more reasonable timing—after all, the Middle East situation has driven oil prices soaring, which will push up inflation in the short term, but the economy is also simultaneously held back. This kind of contradictory scenario makes it hard for the central bank to decide.

What’s interesting is that the Japanese government side has already started to stir. After discussions between Finance Minister Gayatsuki Katayama and U.S. Treasury Secretary Bessent, it was stated publicly that they are prepared to take action to support the yen. The meaning behind those words is clear—if the yen exchange rate continues to weaken, government intervention may be just around the corner.

From a technical perspective, the U.S. dollar against the yen is again edging toward the psychological level of 160. Analysis from Mitsubishi UFJ Morgan Stanley points out that if the central bank truly stays on hold in April, downward pressure on the yen would become even more evident. But even if the government issues warnings, as long as U.S. interest rates remain high and carry trades continue, the dollar’s support will remain strong. Some analyses even predict that USD/JPY could surge to 165.

This situation is quite something to watch—policy, exchange-rate trends, and the international environment are all tugging in different directions. For people trading yen-related positions, there should be plenty of volatility during this period.