USD/JPY: Yen Erases Gains After Japan Inflation Slows Down to 2.7%. Rate Back Near 155.

Dollar is holding the yen in firm grip as forex speculators wait for a possible intervention from Japan. When is it coming?

Key Points:

• Yen briefly rallies but fails to hold gains.
• Israeli attack on Iran shakes up markets.
• What a time to be trading the dollar-yen!
• The USDJPY pair slipped 0.7% early Friday after Japan reported a drop in inflation. For March, the headline inflation rate arrived at 2.7%, down from the 2.8% logged a month earlier. But the move was not enough to keep the yen rallying. Soon after the pair’s quick decline, it was back near its 34-year high of just under 155.00.
• Geopolitical tremors also added to the short-term bullishness in the yen. Israel launched a retaliatory strike against Iran overnight, sending markets scrambling. Japan’s currency initially rallied as it is perceived as a safe haven among currency markets for its low inflation rates, stable economy, and continuous liquidity. Again, that wasn’t enough to convince traders to stay.
• It’s a historical moment to be a dollar-yen trader. The pair is floating at levels last seen in 1990 and Japan is not happy with it. Officials have said they’re carefully monitoring the yen and are ready to intervene at any moment if they decide the speculative action must end. And with that, markets are on the edge of their seats, anticipating a move any minute now.