(change "an" spelling in line 1 ) USD/JPY may stay range-bound between 155 and 158 unless the BOJ turns more hawkish, oil prices ease, or an AI-fuelled equity rally cools as seasonal capital inflows fade in May. Although these forces currently argue for a weaker yen, gains are being capped by official yen buying whenever USD/JPY approaches the 158–160 intervention zone. Given the forcefulness of government messaging, this restraint is unlikely to fade soon. Japanese intervention followed a BOJ warning in its quarterly report that core inflation could run near 3% for a second year if oil prices remain elevated and the yen weakens. That caution came just days after the BOJ left policy unchanged despite an active debate over hiking rates, pushing JGB breakevens to record highs and reinforcing concerns that policy is behind the curve. With the MOF and BOJ committed to acting in concert, intervention will likely be driven by domestic policy objectives rather than IMF rules. U.S. Treasury Secretary Bessent is expected to raise concerns over speculative yen selling with senior Japanese officials next week, though he is likely aware that ultra-loose BOJ policy and a worsening terms-of-trade backdrop, driven by the AI and defense build-out and the Iran conflict, remain the primary drags on the yen.

An easing in oil prices—potentially driven by a U.S.-Iran agreement on the Strait of Hormuz—could soften the expected 155-158 trading range as an improving terms of trade picture reduces the need for intervention, with a close below 155 opening up the year-to-date low of 152.10.
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(Robert Fullem is a Reuters market analyst. The views expressed are his own.)