Rather than 152.00, this level may be 153.00.
The USD/JPY rally to 151.82 following the Bank of Japan policy announcement Tuesday and 151.86 EBS Friday has re-ignited the debate on whether the Japanese government will act to halt yen weakness.
USD/JPY is back near the 151.92-24 double-top hit in 2022 and 2023 before it turned lower. There was heated verbal intervention from Japanese policymakers on both occasions. In 2022, Japan began intervening to halt the yen's fall from September and continued into October when it finally recovered after trading to 151.94.
USD/JPY hit a 151.92 high in November 2023 before verbal intervention (combined with other factors including central bank rate expectations) saw the yen recover. Perhaps it was the lack of actual intervention which limited USD/JPY's fall to 140.27 in December, a far cry from the January 2023 low of 127.22 after actual market intervention in 2022.
The current about of yen weakness could be different. Of course verbal intervention has been heard but the view in Tokyo is that this jaw-boning is not as heated as last autumn. As there was no actual intervention last year, some players suggest the government's proverbial line in the sand may now be higher.
Rather than 152.00, this level may be 153.00 or even as high as 155.00, an area some players see as a Fibonacci objective.
Expect fierce resistance on the way up however with large option barriers tipped at 152.00 and every big figure higher to 155.00 and perhaps beyond.
Many of these positions would knock out Japanese importer buys at much lower levels, triggering heated defensive selling ahead. Gamma plays will also figure significantly.
USD/JPY is back near the 151.92-24 double-top hit in 2022 and 2023 before it turned lower. There was heated verbal intervention from Japanese policymakers on both occasions. In 2022, Japan began intervening to halt the yen's fall from September and continued into October when it finally recovered after trading to 151.94.
USD/JPY hit a 151.92 high in November 2023 before verbal intervention (combined with other factors including central bank rate expectations) saw the yen recover. Perhaps it was the lack of actual intervention which limited USD/JPY's fall to 140.27 in December, a far cry from the January 2023 low of 127.22 after actual market intervention in 2022.
The current about of yen weakness could be different. Of course verbal intervention has been heard but the view in Tokyo is that this jaw-boning is not as heated as last autumn. As there was no actual intervention last year, some players suggest the government's proverbial line in the sand may now be higher.
Rather than 152.00, this level may be 153.00 or even as high as 155.00, an area some players see as a Fibonacci objective.
Expect fierce resistance on the way up however with large option barriers tipped at 152.00 and every big figure higher to 155.00 and perhaps beyond.
Many of these positions would knock out Japanese importer buys at much lower levels, triggering heated defensive selling ahead. Gamma plays will also figure significantly.