USD/JPY Nears Critical 160 Threshold

As USD/JPY approaches the 160 level, the pair's trajectory remains heavily influenced by the divergence between resilient US yields and Japan's low real rates. While upcoming American economic data like the ISM Services index and Non-Farm Payrolls are vital for gauging short-term currency trends, analysts at MUFG emphasize that Japanese intervention may occur if the yen weakens further. Ultimately, a meaningful reversal in this pair likely requires the Bank of Japan to raise interest rates, making Governor Ueda's forthcoming commentary on policy direction a critical event for traders to monitor.

Japan’s stock market has hit an all-time high as a global buying frenzy driven by AI shows no signs of slowing down. The Nikkei 225 rose nearly 3 percent on Wednesday, lifting the benchmark index above 68,000 for the first time.