USD/JPY to remain elevated as Japan's intervention window narrows

USD/JPY is likely to stay at elevated levels as the window for potential intervention by the Bank of Japan (BoJ) narrows. The pair has been trading near multi-year highs, with the US dollar benefiting from a widening interest rate differential between the US and Japan. The BoJ's yield curve control policy, which aims to keep 10-year Japanese government bond yields around 0%, has limited the central bank's ability to combat yen weakness. Additionally, recent data showing a slowdown in Japan's economic recovery, such as weaker-than-expected retail sales and industrial production figures, have further supported the case for a persistently strong USD/JPY. Traders should watch for any signs of verbal intervention by Japanese officials, as well as potential changes in BoJ policy, which could temporarily cap USD/JPY gains. However, the overall trend remains bullish, with the pair targeting a test of the 112.00 level in the near term.