No important events are expected today.

For USD/JPY, the main factor remains the interest rate differential between the US and Japan, but its impact is becoming less clear-cut. The Bank of Japan raised its rate to 1%, and individual board members are advocating for further policy normalization. At the same time, the government’s draft program emphasizes supporting demand through low borrowing costs, creating uncertainty for the Bank of Japan’s trajectory.

US inflation according to the PCE index reached 4.1% in May, so the Fed remains cautious. However, the data matched expectations, and the market reduced the probability of a rate hike in July. This does not eliminate the notable rate differential in favor of the Dollar, but it reduces the likelihood of its rapid expansion. The advantage of the US currency no longer looks so one-sided.

The Yen is hovering near multi-decade lows, and Japanese authorities have stepped up verbal warnings and are preparing measures to manage reserves in case of currency interventions. The longer this situation persists, the higher the sensitivity to official signals. The rate differential supports the Dollar but does not offset the probability of a sharp reaction from the authorities. While the current background remains, the baseline scenario allows for a decline in USD/JPY.

Recommendations: SELL 161.80, SL 162.05, TP 161.05.