Recently, the actions of the Bank of Japan have attracted considerable market attention. At the end of last month, the central bank once again held steady, maintaining interest rates at 0.75%, which was in line with expectations, but three members of the committee advocated for a rate hike, indicating that there are internal voices in favor of tightening. Even more interestingly, the central bank simultaneously raised inflation expectations and lowered economic growth forecasts, reflecting concerns over geopolitical risks.

The central bank governor stated at the press conference that if inflation continues to rise or economic downside risks are limited, there is a possibility of raising interest rates. Once these words were spoken, market expectations for a yen appreciation clearly intensified. After the USD/JPY exchange rate was announced, it initially rose and then fell, reflecting the market digesting these signals.

Currently, the market's biggest concern is whether the rate hike can happen in June. According to overnight index swap data, the market currently expects about a 65% chance of a rate increase by the central bank in June. If Japanese authorities confirm a de-escalation of the Middle East situation, the window for a rate hike is expected to open around June or July. Once a rate hike is confirmed, the yen's upward momentum will be more solid.

But there is a key issue: the yen exchange rate is currently hovering around 160, and the Japanese Finance Minister has already indicated that they will intervene in the currency market 24/7. Analysts at Sanford C. Bernstein pointed out that the 160 level remains a major resistance point, and the risk of government intervention could suppress further expansion of short yen positions. This means that the yen's appreciation potential might be artificially limited.

The National Australia Bank believes that Japan's intervention threshold will be higher than before, with the final line of defense expected around 162. In other words, to see the yen continue to rebound, there needs to be clearer evidence that the central bank is truly prepared to continue tightening policy amid external uncertainties. For now, yen appreciation still requires waiting for stronger policy signals.