The pair is coming into today on the back of nine straight days of gains, following a push above 145.00 - where Japanese authorities intervened last month. There was a hint of intervention last week after the US CPI data but that was quickly bought up and such a move was neither confirmed nor denied by Japan - as you would expect given the market reaction.
But as we start to approach the 150.00 mark, expect traders to be more cautious in anticipation of another round of intervention by Japan officials. There isn't so much so a trigger point in terms of data this week, but the yen isn't able to take in much comfort either amid the more positive risk sentiment - even if the dollar itself is also not running hot.
The fear now is that if we do see a return to the buy dollar, sell everything narrative, we could quickly start to see 150.00 come into focus for USD/JPY. So, what will be the playbook then?
I would expect some buyers to be cautious and take some off in the run up to the key level as it is perfectly reasonable to expect another bout of intervention - one which may be even stronger - from Japan. That said, unless the MOF is going to commit to expending reserves to defending the key level, which isn't ideal given the fundamental backdrop, the line in the sand can only stay there for so long before the tide washes it out.
In other words, Japanese authorities could pin the market below 150.00 for a short period only before the continued upside pressure takes over and they will have to find a new level to make a stand.
One thing to be extremely wary about though is the potential for a BOJ pivot. The central bank is expected to raise its inflation forecast from 2.1% to the highs in the 2% region and while that isn't enough to switch up their rhetoric yet, it is maybe one step closer. That will no doubt be the spark for a turnaround in the yen - if we do come to that.