Post #16235

USD/JPY Analysis: The Intervention Is Now Fading Off USD/JPY grinding back toward 158 after intervention dropped it from 160 to 155 just days ago. The effect is already fading — and today's CPI print explains why. April CPI at 3.8% with core at 2.8% just made the Fed's hold even stickier. Hike odds rising to ~30% by year-end. The rate differential — 3.50–3.75% Fed vs 0.75% BoJ — is the gravity pulling this pair higher. If the Fed moves toward hiking while the BoJ stays cautious, that gap widens and no amount of intervention changes the math. Japan's problem is structural. Intervention buys time but doesn't close a 300bp rate gap. Every spike lower gets bought because the carry trade is too attractive. Tokyo needs the BoJ to hike or the Fed to cut — neither is happening soon. The intervention floor is real but temporary. The rate differential is permanent until policy changes. USD/JPY grinds higher until one central bank blinks. - Alan