USD/JPY is on the freeway to the hazard zone

USD/JPY bulls are playing with fire.

The pair is up for a seventh straight day after a surprisingly strong US services PMI. The reading of 55.1 is a 26-month high and well above the 53.7 consensus.

The report sparked broad US dollar buying and has pushed USD/JPY closer to the 160.00 line in the sand. That’s where the Japanese Ministry of Finance last intervened, sending the pair plunging as low as 151.85.

I close here would be a fresh 34-year closing high in the pair. Yesterday, I wrote about five reasons that the pair had been climbing.

The last time, officials allowed for a brief break of 160.00 before stomping on the market. There is a chance they could allow it to break those intraday highs or run to 165.00 before stepping in. The official lines are that they’re not setting price levels but want to avoid disorderly moves.