USD/JPY stays poised close to multi-year highs, however Tokyo warnings develop louder

USD/JPY weekly chart

The pair is flat on the day now at 151.42 because it continues to hold close to multi-year highs since final week. The 2022 and 2023 highs of 151.90-94 is the important thing resistance area in play for the time being for USD/JPY. Maintain beneath and sellers can look to construct off that ceiling to push worth again decrease. However break above and the sky is the restrict for the pair as there’s little technical resistance left till above 160.

As such, the one factor that may rein in any USD/JPY breakout from right here is intervention by Tokyo. And the warnings are rising louder in the previous few days. Earlier as we speak, Japan’s high foreign money diplomat Kanda was fairly vocal in regards to the scenario. He stated that the yen’s weak point didn’t mirror fundamentals and warned towards the latest “big slide”.

Kanda famous that the newest yen strikes had been “speculative”, including that “I feel something strange about it”.

That is a suggestion that Tokyo may look to get extra concerned if the one-sided transfer continues. And it comes regardless of the BOJ placing an finish to adverse charges and scrapping its yield curve management coverage final week.

Trying on the scenario, I reckon Tokyo will not look to intervene as long as the technical ceiling above holds. A break larger will tilt the stability of dangers for the yen, which may result in a a lot sharper decline within the foreign money subsequent. As such, the potential strains for USD/JPY intervention look to be nearer in direction of 154 to 155 for my part.

For now, the bond market will stay a key spot to concentrate to. 10-year Treasury yields are at 4.225% and as long as they keep underpinned, chances are high USD/JPY will observe as nicely.