The yen is approaching the 160 intervention red line. Japanese Finance Minister Katayama Satsuki has received tacit approval from the United States to take bold actions, and the probability of substantial intervention has increased. The Bank of Japan's expectation to raise interest rates in April has plummeted to less than 20%, but raising interest rates to 1% before the end of June is still the mainstream consensus. The conflict in the Middle East has created a double-edged sword effect. Pay attention to the two key nodes of the interest rate decision on April 28 and the June meeting.

The conflict in the Middle East pushed up oil prices. The Bank of Japan kept interest rates unchanged at 0.75% in March, casting doubt on the prospect of raising interest rates in April. The risk of stagflation in Japan has increased, and the Japanese yen has become the core financing currency for global arbitrage. The strategy of borrowing the Japanese yen to buy the currencies of energy exporting countries has returned more than 6% during the year. We need to be alert to the risk of violent appreciation of the yen triggered by the escalation of conflicts, and pay attention to the three major variables of the central bank's rhetoric, oil prices, and wages.