How much can the BOJ do to prevent a major fall in yen crosses?
Despite the continued fall in Treasury yields to start the European morning, the pair has been rather "calm" with price only sliding from 105.90-00 to 105.70 currently.
But as long as risk aversion continues to dominate the market and with the dollar struggling to get off the floor amid the yields meltdown, there is good reason to expect USD/JPY to continue its trip to the downside from hereon.
The 105.00 level is obviously the next key target with the August 2019 low at 104.46 one to watch as well. But I reckon traders would be wary of potential BOJ intervention - even if it is to just jawbone the currency - around current levels.
The path of least resistance remains for a move lower and while the BOJ may step in, they really need to do something big in order to try and quell the momentum before it really gets out of hand.
It is a bit of a slippery slope for Kuroda & co. too though. If 105.00 gets taken out without much resistance, 100.00 will soon be in the radar as the virus outbreak continues to eat away at the global economy over time.
We feel your pain, Mr. K.
