As yet, no fresh verbal intervention from the MoF has been reported, though there is a heightened chance of this. Given the risk that verbal intervention may be followed up with JPY purchases by the authorities, the market will likely be very reluctant to push USD/JPY above 152.00.

The slow progress of policy normalisation suggests that USD/JPY may continue to trade above the 150 level in the weeks ahead.

Any step-up in speculation of a rate hike would allow USD/JPY to move lower next year. The spring wage rounds are likely to be a crucial determinant in policy decisions in 2024. We see the potential for USD/JPY to move back below 145 in H2 2024.