Yen Weakness Returns: USD/JPY Grinds Back Toward 159.5
The yen’s early-May reprieve is officially over.
USD/JPY closed Friday at 159.35 and touched 159.75 intraweek, fully erasing the correction that took the pair down to 155.05 just three weeks ago. If you’re scoring at home, that’s a 470-pip round trip, and the message is unambiguous: every dip in this pair is still being bought.
Why the sellers keep losing
The structural case for a stronger yen hasn’t changed. Japan’s nominal rates remain far below America’s, the carry still pays you to be short yen, and the Ministry of Finance’s tolerance for weakness has limits. But “structurally right, tactically early” is the most expensive combination in FX. The market can stay expensive longer than a contrarian can stay solvent.
What the bulls need is a catalyst, and the calendar hasn’t provided one. Until Japanese inflation or wage data genuinely shifts Bank of Japan expectations, short-yen remains the market’s default setting.
Euro holds the range, sterling sags
EUR/USD is stuck near 1.1637, unable to bounce meaningfully off the 1.1587 support tested last week. That hesitation worries me — strong support should produce a sharp, short-covering rally. Instead we’re getting drift. Drift at support usually resolves lower.
Sterling slipped to 1.3452 from 1.3496, a modest give-back after the mid-May wobble. The pound’s story remains the strongest in G10, but even the best story needs a rest.
Levels for the week: USD/JPY 160.30 on the topside (the April high), 158.00 below. EUR/USD 1.1720 above, 1.1587 below — whichever breaks first probably sets the tone for June.
Disclaimer: This is market commentary, not investment advice. FX trading carries substantial risk of loss.
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