USD/JPY breaks above 149

USD/JPY has edged higher today and is currently trading at 149.17. The yen has fallen for eight straight sessions, losing 500 points in that time.

Yen slide continues

The yen continues to set new 24-year-old lows as the dollar/yen has pushed above the 149 line. This is a higher level than when the government intervened last month, which marked the first intervention since 1998. Officials have reacted to the yen’s latest slide with familiar verbal rhetoric. Bank of Japan Deputy Governor Masazumi Wakatabe has said that the yen’s recent fluctuations were “clearly too rapid and too one-sided”. Wakatabe added that there was no contradiction between currency intervention to prop up the yen and the BoJ’s ultra-low interest rate policy, which has been the driver of the yen’s poor performance this year.

Prime Minister Kishida said on Saturday that the BoJ would have to maintain policy until wages rose, and the BoJ has not shown any signs of rethinking its policy, even with the yen sliding and inflation remaining above the central bank’s target of 2%. Japan’s core CPI rose 2.8% in August, the fifth straight month that it has exceeded the 2% level.

The key question is whether the government again step in and intervene in the currency markets. The first intervention clearly didn’t achieve its desired effect of stabilizing the yen below 145 and Japan’s foreign reserves fell by a record amount in September, around 2.8 trillion yen. The game of cat-and-mouse between the government and speculators betting against the yen continues, and another currency intervention could be in the works, but it would likely have to be much larger than the first intervention in order to have a more lasting effect.

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USD/JPY Technical

• USD/JPY faces resistance at 150.04 and 151.32
• There is support at 148.85 and 147.58

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