The Japanese yen weakened in Asian trading on Wednesday against a basket of major and minor currencies, extending its losses for a third consecutive session against the US dollar and reaching the 160-yen threshold, placing investors on high alert for a possible intervention by Japanese monetary authorities to support the local currency and curb excessive movements in the foreign exchange market.

The US dollar maintained its gains against a basket of global currencies as markets assessed developments in negotiations between Washington and Tehran, following confirmation from both sides that diplomatic contacts remain ongoing and discussions over the final terms of a potential agreement are continuing.

The Price

Japanese yen exchange rate today: The dollar rose by nearly 0.1% against the yen to 160.00, the highest level since April 30, from an opening level of 159.91. The session low was recorded at 159.82.

The yen ended Tuesday down about 0.2% against the dollar, marking its second consecutive daily loss, amid rising tensions between the United States and Iran over the Strait of Hormuz.

The 160-yen threshold

Japanese authorities are closely monitoring movements in the currency market, particularly as the yen has fallen to the key 160-per-dollar level, which has long been viewed as a threshold that could trigger another intervention in the market.

According to Reuters sources, Tokyo intervened several times in late April and early May to halt the yens decline, but the currencys recovery proved short-lived. At the time, the exchange rate reached 159.25 per dollar, its weakest level since April 30.

Japanese finance minister

Finance Minister Satsuki Katayama stated on Tuesday that authorities stand ready to intervene in currency markets if necessary, while declining to comment directly on recent yen movements.

Views and analysis

Hirofumi Suzuki, Chief FX Strategist at Sumitomo Mitsui Banking Corporation, said that upward pressure on crude oil prices makes it easier for selling pressure on the Japanese yen to intensify.

Suzuki added: I do not believe there is a precise red line that would automatically trigger intervention, but the 160161 per dollar range is likely being watched very closely by Japanese authorities.

Japanese interest rates

The Bank of Japan will meet on June 1516 to assess the appropriate monetary policy tools for the worlds fourth-largest economy.

Markets continue to price in roughly a 60% probability that the Bank of Japan will raise interest rates by a quarter percentage point at its June meeting.

Investors are eagerly awaiting remarks from Bank of Japan Governor Kazuo Ueda later today for clues on whether the central bank intends to move forward with a rate hike in June.

US dollar

The US Dollar Index rose about 0.1% on Wednesday, extending gains for a third consecutive session and reflecting continued strength in the US currency against a basket of global currencies.

The advance comes as investors remain cautious and reluctant to take on risk while awaiting further developments in negotiations between the United States and Iran aimed at ending the conflict and reopening the Strait of Hormuz.

US-Iran negotiations

US President Donald Trump said he believes a framework agreement with Iran to extend the ceasefire could be reached within the coming week.

Iran confirmed that it is still reviewing the final draft proposal and has not yet submitted its official response to the United States.

US Secretary of State Marco Rubio stated that Iran has agreed to discuss aspects of its nuclear program that it had previously refused to negotiate.

The US side continues to insist that sanctions relief will not be granted solely in exchange for reopening the Strait of Hormuz, and that any agreement must also address core issues such as Irans nuclear program.