USD/JPY sellers were spooked by the emergence of the dreaded BIG bid on EBS at the 89.05 level earlier in the day and set about covering shorts despite signs of risk aversion in other markets.
There has been speculation that the buyer on dips was Kampo, the big Japanese institutional investor and an arm of the postal saving system. Traders see Kampo as being somewhat influenced by the Japanese authorities, to put it politely. Kampo sends signals to the market, in its semi-official capacity, that the government is displeased with the price action.
That seems to be the message the market received today and it bounced into the 89.40s as a result. Traders note US real-money accounts selling some USD/JPY into rallies this afternoon helping limit the gains.
Look for small stops to gather just above the 89.50 level this afternoon. It trades now at 89.40.