The speed bump from jawboning by Japanese officials and market concern about a BOJ policy pivot slowed down the USD/JPY surge in the past week but now that we’ve cleared the latter, it is looking like buyers are taking charge again. The pair is now running up to 135.96, its highest since October 1998.
The technical dominoes continue to fall by every 500 pips for USD/JPY since breaking the 120.00 mark and there is little resistance from hereon until we get towards 140.00 potentially. That will be the next big psychological level as to whether we might see firmer intervention by Japanese officials.
Otherwise, the continued policy divergence and lack of buying conviction in bonds amid continued central bank tightening and surging inflation will just continue to present headwinds for the Japanese yen.
Another pair which I have been rather fond of since last week has been CHF/JPY and it is up for a fourth consecutive day, trading to 140.40 – up 500 pips since the SNB policy pivot.