A more dovish take by the BOJ yesterday and then the purported absence of Tokyo intervention in October gave the green light for USD/JPY to march higher. The pair finally shook off the 150.00 mark, posting a daily close above 151.00 for the first time since 1990. Are we finally seeing a more meaningful breakout in USD/JPY at last?
USD/JPY daily chart
It definitely looks like it but as Japanese officials come out to warn against “one-sided” and “rapid” moves in the currency, we are seeing traders check back and heed the caution.
To me, it’s more about the pace of the decline in the Japanese yen rather than any big levels now that Tokyo has decided to get rid of the shackles at the 150.00 mark.
The path for USD/JPY looks to continue to point to a move higher but at some point, Japanese officials will draw a line on where their pain tolerance will be met. I reckon for now, it’s more about managing the speed of the drop in the yen. Then after, we can start talking about potential intervention if it stretches too far.
If anything else, the favoured levels look to be at 155.00 and then the 160.00 level. Verbal intervention is notable when we first start get into a new territory but it will eventually lose its effectiveness down the road. As the saying goes, actions speak louder than words.