Yen strengthens after top Japanese diplomat reaffirms currency pact with US

Japan is keeping the yen under close observation, as top currency diplomat Mimura emphasised that officials remain worried about the currency's fundamental trends and stand ready to act if needed.

Mimura noted that Japan, its finance minister and the United States have delivered an unambiguous message concerning the yen, underscoring the tight partnership between the two nations. He dismissed worries that budget restrictions might curb Japan's capacity to intervene by buying yen, stating he has "absolutely no such concern".

The remarks indicate that Japanese policymakers are still tracking the currency intently, especially how the difference in interest rates between Japan and the US influences market behaviour. Mimura stated that Japan always diligently monitors how rate movements in both countries are impacting the yen.

He also touched on the wider ties between Tokyo and Washington, characterising their robust "currency alliance" as reaching beyond forex into broader economic-policy collaboration and global supply networks.

Notwithstanding this coordination, Mimura made it plain that Japan is neither content nor comforted by the yen's fundamental trends. The statements thus heighten the possibility that Japanese authorities may step in more vigorously if yen depreciation becomes chaotic or pushes further from levels they deem acceptable.

For traders, the main message is that intervention is still a viable option, while Japanese officials keep watching both currency swings and the shifting US-Japan rate gap.

Looking more broadly, USD/JPY is currently testing a solid support area near 156.50. Dip buyers are likely to come in around that support, with a defined risk beneath it, aiming for a move up to the 160.50 resistance next. Conversely, sellers will be looking for a break lower to extend the decline toward the 155.00 support.