US Economy Soars, Dollar Hits 34‑Year Peak vs Yen

USD/JPY Skids Slightly After Reaching a 34‑Year High

The Japanese yen didn’t get the strong reception it hoped for when the USD/JPY pair climbed to a fresh April record of 154.86 on Tuesday. That figure marked the strongest the pair has been in 34 years, and the US dollar is riding the wave of optimism about the American economy.

Yen‑Guard Squad Alert

Shunichi Suzuki, Japan’s Finance Minister, issued a friendly warning that authorities might step in to “back” the yen if needed. He called the current environment ripe for intervention.
Japan’s historical intervention zone (between 150.00 and 152.00) is still far below today’s level, so the chances of a swoop are slim.
Meanwhile, Treasury Secretary Janet Yellen hinted last week that Japan and Korea could also support their currencies if the situation demands.

Signal from the Pocket Watches

A slight uptick in Japan’s preliminary PMI for April – the “axis of business health” – temporarily slowed the ride of the USD/JPY. Traders are now holding their breath for the US S&P PMI numbers to decide if the American market will keep pushing the dollar higher.

Debt Parade on the East Coast

The US government plans to sell $180 billion in Treasury bonds this week.
Tuesday will also host the auction of the largest-ever two‑year Treasury, potentially nudging yields higher and giving the dollar a boost against the yen.

The BoJ’s Cozy Stance

Governor Kozo Oida maintains that core inflation is still below 2.0%, so the Bank of Japan will keep its pocket‑friendly stance for now. He warned that if inflation nudges toward 2.0%, a rate hike might follow in the short term.

Looking ahead, the BoJ is scheduled to meet next Friday for April’s policy. While a quick rate increase is unlikely, a cut in Japanese government bonds could still tighten the yen, hurting the USD/JPY pair.

What Could Flip the Switch?

If the BoJ adopts a hawkish tone on Friday, traders forecast that Japanese authorities may pause any intervention. A modest climb in core inflation expectations for 2024 could widen the policy’s room for tightening.

Japan’s composite PMI, released by Jibun Bank, shows private‑sector growth accelerating fastest in eight months – a headline that may sting for exporters but ease the yen’s inflationary pain.

US Data Might Take the Lead

US economic releases later this week – especially the GDP figures on Thursday and core PCE data on Friday – could push the USD/JPY up or down. The Federal Reserve’s plan to keep rates high for longer, combined with stubborn inflation, suggests that the interest‑rate gap between the US and Japan will stay wide for a while.

All that means: the yen may not get the safe‑haven boost it needs, while the dollar will probably keep humming along, thanks to the Fed’s hawkish outlook.