Until today, USD/JPY had rallied every day this week in impressive fashion.
However after some tough talk from the finance minister today, there is some heavy selling. The pair is now down 201 pips to 154.23 as it's now cut through Wednesday's low.
I hesitate to put too much of the blame on the drop on the finance minister but there could be bets on intervention going on here, or profit taking.
What makes this a tricky move is that it's not coming with a notable drop in yields. Treasuries are back to flat on the day but there is hardly anything happening there that would drive a USD/JPY bid.
Meanwhile, less-dovish comments from Powell and other Fed officials argue for buying the dollar.
Overall, I'm hesitant to chase this drop and more likely to look to buy a dip because nothing has changed. The bigger problem for USD/JPY could be equity markets as the Trump sugar-high fades.
