FOREX: Yen steady as intervention fears linger with Japan shut for holidays

SINGAPORE — The Japanese yen steadied at the start of Asian trading on Monday, edging higher after a volatile stretch following suspected government intervention aimed at supporting the currency last week.

The yen JPY= rose 0.1% to 156.885 per dollar, after gaining 1.4% over the past month. Most of that advance came on Thursday, when authorities were widely believed to have stepped into the market.

Japanese officials have declined to confirm whether they intervened. However, sources familiar with the matter told Reuters that yen-buying activity was carried out, marking the first such move in two years.

Analysts remain cautious about the effectiveness of unilateral intervention, which would represent the third such effort in the past four years.

“The primary focus will be whether further intervention occurs, noting that Japan is closed for the Golden Week holiday and liquidity will be thinner during this period,” said Mahjabeen Zaman, head of FX research at ANZ Bank in Sydney.

“And more importantly, whether the U.S. will join Japan’s efforts in supporting the yen,” she added. “If the yen weakens further, you could argue that the likelihood of bilateral intervention increases.”

Broader markets were also cautious after U.S. President Donald Trump said Washington would begin an operation on Monday morning to free ships stranded in the Strait of Hormuz as a “humanitarian gesture,” amid tensions linked to the U.S.-Israeli conflict with Iran.

The U.S. dollar index =USD, which measures the currency against six major peers, was flat at 98.144.

In commodity-linked currencies, the Australian dollar AUD= gained 0.1% to $0.7211, while the New Zealand dollar rose 0.2% to $0.5905.

The Reserve Bank of Australia is set to announce its next policy decision on Tuesday, with most economists surveyed by Reuters expecting a cash rate increase to 4.35%. Last week, Australia’s two largest supermarket chains warned of rising price pressures as the Iran conflict pushes up fuel and raw material costs.

The euro EUR= edged up 0.1% to $1.1730 after German Chancellor Friedrich Merz moved to ease tensions with Trump following the announcement of a planned troop drawdown. Germany’s economy ministry said it is coordinating with the European Commission while engaging in talks with Washington, after Trump said on Friday he would raise tariffs on EU cars and trucks to 25%.

The British pound GBP= also gained 0.1% to $1.3586.

In cryptocurrencies, bitcoin BTC= slipped 0.1% to $78,824.22, while ether ETH= rose slightly by 0.1% to $2,331.95.

-Reporting by Gregor Stuart Hunter / Reuters