Yen at multi-year lows, Euro surges as BOJ meeting looms

Yen falls: Amidst anticipation of the upcoming Bank of Japan (BOJ) meeting, the Yen plummeted to multi-year lows against the dollar and Euro, igniting investor vigilance for potential intervention measures. The Euro soared to 165.62 yen, its highest since 2008, fueled by robust business activity in the eurozone.

Analysts attribute the Yen's decline to expectations of cautious BOJ policy tightening. While Japanese authorities remain poised for intervention, doubts linger about their immediate actions ahead of the pivotal BOJ gathering. The dollar surged to 154.87 Yen, inching closer to the 155 threshold, a potential trigger for Japanese intervention.

Japanese Finance Minister Shunichi Suzuki's warning signals Tokyo's readiness to counter excessive Yen fluctuations. However, apprehensions persist regarding direct intervention amid the BOJ's imminent policy review.

Market sentiment is bolstered by the anticipation that the BOJ will project inflation to hover around its 2 per cent target over the next three years. The Euro gained momentum against the dollar, hitting $1.0695, buoyed by the German PMI data. Meanwhile, the pound treads cautiously following Bank of England policymakers' outlook on inflation deceleration towards the 2 per cent target, possibly leading to summer rate cuts.

Sterling's resilience against the dollar, stabilising at $1.234, was supported by robust British business activity. Investors await key US economic indicators this week, including first-quarter GDP data and the Personal Consumption Expenditures (PCE) index, shaping expectations on potential Fed rate cuts.

The fluctuating global currency landscape underscores market uncertainty amid evolving central bank policies and economic indicators. With the Federal Reserve anticipated to be one of the last to cut rates, the dollar's trajectory remains pivotal. Any divergence from market expectations in this week's economic releases could drive significant shifts in currency markets, influencing investor sentiment and shaping future monetary policies.

(with Reuters inputs)