The pair is seeing a modest bounce today, up 0.4% to 158.65 currently. There's not much of a catalyst but it does come amid a rebound off the upwards trendline for this year. So, one can argue on that from a technical standpoint.
After Japan intervened last week, it's now once again a war of attrition between dip buyers and officials in Tokyo. Who has more resolve and appetite to chase the next move? Can dip buyers keep the trend going or are we going to see a more meaningful break lower?
One key risk event to watch today will be the US retail sales data. With Japan having stepped into the market during a key release in US trading last week, they might feel tempted to do that again to really hammer home their point.
That being said, USD/JPY was trading closer to 162.00 when they intervened last week and we're now keeping below the supposed 160.00 threshold. But still, it is a potential risk factor to watch out for.
That of course will also depend on what we get from the US retail sales data. A softer report will be what Japan will be hoping for, at least providing them with the option to step in if they would like.
As for European trading today, there won't be too much to shake things up. There are some decent-sized expiries for USD/JPY at 159.00-35 that could limit the upside before we get to the key risk event later. Besides that, traders will have little to work with in the meantime.
