Recently, I noticed that the Japanese yen is starting to become a bit troublesome again, with the USD/JPY exchange rate approaching the 160 level, and it seems that the Bank of Japan's interest rate hike plan may be delayed. Last month, the central bank was originally considering raising rates in April, but now market expectations have dropped to less than 20%, down from about 50% at the beginning of the week.

The main reason is that the Middle East situation and soaring oil prices have disrupted the rhythm. The Governor of the Bank of Japan previously mentioned that rising crude oil prices exert downward pressure on the Japanese economy, making rate hikes more complicated. Sumitomo Mitsui economists believe that the central bank is now more likely to raise rates in June rather than rushing to act in April. A recent survey by Reuters also shows that economists' expectations for rate hikes in April and June are roughly even, each around 35-38%.

Interestingly, the Japanese government has already started to hint at intervention. The Finance Minister warned that they are prepared to take bold actions to support the yen, but if the central bank's rate hikes are too slow and U.S. interest rates remain high, the dollar will continue to strengthen. Some analysts say USD/JPY could rise to 165, as carry trades and energy prices continue to push the dollar higher. So, the key still depends on the central bank's upcoming actions.