If anything else, it shows that:
1) The drop earlier wasn't likely any intervention check or otherwise from Tokyo. I mean, the timing of the move was already suspect as mentioned at the time. And that is arguably the giveaway now after the fact. It is definitely easier to digest and make sense of the move two hours later of course. So, what could it have been?
2) The pair is definitely in a rather abnormal state at the moment. Plenty of traders are staying sidelined in fears of being hammered down by Tokyo. As such, perhaps larger flows would lead to exacerbated price movements - at least more so than usual. That could've been it, alongside stops being triggered in such quick fashion.
3) The dip buying shows the underlying appetite in the market right now. It's tough to fight the momentum especially with the BOJ conviction also lacking as of late. I mean, recent inflation data hasn't been shaping up the way that they're hoping it to be. And that is throwing a wrench in the works on any further rate hikes this year. That is not to mention that Japanese yen pairs are also underpinned by higher bond yields in recent weeks. Adding to that is the lack of technical resistance on the way up for USD/JPY currently.
In any case, we're back to where we were a few hours ago now. Buyers might not get too carried away for now as we await the US PCE price data coming up. But barring any surprises, we could see price action start to pick up again after that. The 157.00 mark will be an interesting level to watch, as with any big round figures from hereon.
And as mentioned earlier here, it will be interesting to see if Tokyo has the appetite to act at the last minute today. Mind you, it is a Japanese holiday on Monday. But still, I wouldn't rule out any action in the early morning then if there isn't anything before the weekend later.
