"The Bank of Japan can't save the yen"

ING warns the Bank of Japan’s cautious tightening leaves the yen vulnerable, driving near-term upside pressure on USD/JPY. Even a 25bp BoJ hike in June or July to a 1.00% policy rate would likely keep real rates negative given core inflation above 2%, reducing the yen’s appeal. ING expects USD/JPY to challenge the 2024 high near 162 with an outside risk of intervention only around 165, but notes any intervention may be less effective because speculative yen short positions are roughly half the size that triggered the 2024 short squeeze. A steady dollar and a potentially hawkish Fed add to yen headwinds, while energy-driven terms-of-trade shocks weigh on other Asian importers. The note implies continued USD/JPY strength, constrained scope for a sharp yen recovery, and limited currency-driven support for Japanese assets.