Recently, the expectation of the Bank of Japan raising interest rates in April has significantly decreased, with market probabilities dropping from 50% to less than 20%. Rising crude oil prices and worsening Middle East tensions have put the central bank in a difficult position, wanting to raise rates but also fearing economic damage, so June is more likely to be the timing for a rate hike.

This directly affects the yen's movement, with USD/JPY recently approaching the 160 level. The latest Reuters survey shows that economists see the chances of rate hikes in April and June as roughly equal, at 38% and 35%, respectively. Japan’s Finance Minister has already warned about readiness to intervene to support the yen, but if the central bank continues to be slow and U.S. interest rates remain high, carry trades will keep pushing the dollar higher, and the yen may continue to depreciate, with some analysts even suggesting it could rise to 165.

It seems that attention should now be focused on the Bank of Japan’s decision on April 28 and the government’s specific actions, as these will determine the future direction of the yen.