ANZ Research discusses JPY outlook and the scope for anther wave of Japan's MoF intervention.

"USD/JPY is holding near 160, keeping intervention risk in play. Intervention can smooth the pace, not change the trend. A durable move in the JPY needs more credible BoJ normalisation and lower energy prices. Official rhetoric has had limited impact, and demand for upside USD/JPY protection has increased as spot approaches prior intervention levels," ANZ notes.

"Recent BoJ communication has been incrementally more hawkish, and the June meeting is now live. JPY weakness is feeding into inflation expectations, long-end JGB yields and the domestic political cost of staying too accommodative. But the macro backdrop is not yet strong enough on its own to deliver sustained JPY strength. A June hike, or a more hawkish signal from Governor Ueda, would strengthen the medium-term case for JPY. The BoJ meeting on 15–16 June is key. A hike with hawkish guidance may support a JPY rally, but this also will have to go hand in hand with energy prices moving lower reducing the negative terms of trade shock that is weighing on both the JPY and domestic fiscal spending plans," ANZ adds.