USDJPY Market Overview—High-Level Fluctuations Under Dual-Core Game

As of May 15, $USDJPY has risen for the fifth consecutive day, with quotes slightly below 158.50, approaching the two-year low of 160.70 set during Japan's first intervention on April 30. The market shows a typical tug-of-war between bulls and bears.

Cutting rates to raise rates, interest rate differentials lock in the main channel

The driving core remains the policy gap between the US and Japan. The Federal Reserve's interest rate stays at 3.50%-3.75%, while the Bank of Japan is only at 0.75%. As the US-Iran conflict pushes inflation pressures higher, the market has fully priced in zero rate cuts by 2026, and some even believe the Fed's next move could be a rate hike rather than a cut. Although the Bank of Japan expects to raise rates from 0.75% to 1.00% in June, the gap with the US remains significant, and arbitrage trading continues to suppress the yen.

Japan intervention: strong deterrence but difficult to change the overall trend

Japan's authorities used about $35 billion for their first intervention on April 30, and suspected market entry again on May 6. CFTC data shows that as of the week ending May 5, speculative net short positions in the yen sharply declined from 102,059 contracts to 61,738, indicating that intervention has indeed suppressed large-scale short-selling risks. However, the effect of intervention is rapidly fading—the previous "157 half-range" defense line has been broken, and the fundamentals remain unchanged; intervention can only buy time.

Fundamental and sentiment pressures

Japan's March household spending fell by 2.9% year-on-year, with consumption declining for four consecutive months, indicating a sluggish economic recovery. Persistently high oil prices worsen the trade deficit, and the "see-saw effect" created by the Nikkei index hitting new highs also adds additional pressure on the yen. Overall, the yen's depreciation stems from structural and fundamental issues. Unless interest rate differentials narrow significantly or Middle East tensions ease markedly, the overall trend of a weak yen is unlikely to reverse in the short term. #TradFi交易分享挑战