The Japanese yen continues to struggle in trading this week, enabling USD/JPY to make a push higher back to the 155.00 level. That’s the first time since early February that the pair has moved back up to test the figure level above. As with big round figures, they tend to take on more importance with regards to USD/JPY considering that they double up as key psychological levels as well.
And even more so when associated with a dramatic one-sided move in the currency, as we have seen since Sanae Takaichi won the LDP leadership election in early October. Since then, USD/JPY has gained over 5% in a little over a month with a near 500 pips push over the last four weeks.
That’s stirring the pot in terms of potentially inviting actual intervention by Tokyo, not least since verbal intervention has done little – if not nothing – to halt the decline in the yen currency.
And it isn’t just a case against the dollar, yen crosses have also moved up sharply over the past month as well. EUR/JPY is up well over 3% in a month to multi-decade highs above 179 while AUD/JPY is also seen up over 4% in the same period to above 101 now – its highest since November last year. It’s looking rough out there for the yen.
So amid a continued one-directional and rapid pace of decline, it could definitely prompt Tokyo to intervene. The question is, where will they decide to draw the line?
I’d argue that it is not just a question of where but also if there are any moves that would be deemed too rapid
