USD/JPY looks vulnerable above 141.50 as investors anticipate BoJ’s stealth intervention

• USD/JPY is expected to show losses if fails to sustain above 141.50.
• A moderate upside move in the USD Index has concluded now as investors are expecting only one rate hike from the Fed.
• BoJ might do a stealth intervention if USD/JPY climbs to 145.00.

The USD/JPY pair has faced stiff barricades around 142.15 in the European session. The asset is expected to deliver more weakness below 141.50 as the US Dollar Index (DXY) has shown a volatile action after facing stiff resistance around 102.60.

S&P500 futures have displayed significant losses amid caution in the market participants ahead of the US opening after an extended weekend. The risk appetite theme has been dented again as the street is mixed about the interest rate guidance from the Federal Reserve (Fed).

A moderate upside move in the USD Index has concluded now as investors are expecting that the Federal Reserve (Fed) will hike interest rates only one time despite Fed chair Jerome Powell has confirmed two rate hikes by year-end. Also, the US Treasury yields have softened following the footprints of the USD Index. The yields offered on 10-year US government bonds have dropped to near 3.79%.

Later, Fed Powell’s testimony will remain in the spotlight. Fed Powell is expected to deliver detailed guidance behind keeping interest rates steady in June’s monetary policy. Also, further guidance and the current condition of the banking crisis will be in focus.

On the Japanese Yen front, more than half of economists polled by Reuters favored that Japan's government and the Bank of Japan (BoJ) will act to stop the yen's decline if it depreciates to the 145 per U.S. dollar level. This could be done by a stealth intervention from the BoJ.

In the Asian session, Japan’s ministry reported mixed Industrial Production data (April). Monthly economic data surprisingly expanded by 0.7% while the street was anticipating a contraction of 0.4%. Annualized Industrial Production was contracted by 0.7%, higher than expectations of a 0.3% contraction.