The price action in USD/JPY right after the hotter-than-expected US CPI data yesterday reeked of intervention by Japanese authorities as we saw a fall from 147.65 to 146.45 in a quick minute. That dip was quickly bought up and it could be pointing to the notion that markets would expect Japan to do more if it wants to arrest the slide in the yen.
It is pretty much a slap in the face for Japanese authorities if their round of intervention yesterday failed this quickly. It is one that they will surely not admit, as is the case earlier in the day here. At this point, they either risk expending more of their reserves to try and stem the decline or they just let it go and embrace the consequences of another nosedive in the currency.
After the move yesterday, there has been some poking and prodding today around 147.50-60 levels but amid the latest bout of dollar strength, we are now seeing traders take a chance to push above the high yesterday of 147.65 and now also the 1998 high of 147.67.
The 150.00 mark is the next clear line in the sand for any psychological resistance and perhaps where we might see Japan draw a firmer line in defending the yen next.
