USD/JPY has been extremely bullish since March, after already being bullish for the last two years. As a result, this pair has gained around 20 cents in the last three and a half months. The US has turned quite bullish during this time, while the JPY has turned bearish as the Bank of Japan continues to refuse any interest rate increase, while the FED on the other hand, has raised rates by 75 basis points (bps) already and is accelerating the pace as markets are anticipating a 75 bps rate hike tomorrow, although the official projection is a 50 bps hike.

USD/JPY H4 Chart – The 20 SMA Keeps Holding As Support

The bullish pressure remains strong for this pair

Remarks by BOJ governor, Haruhiko Kuroda

• Recent sharp fall in the yen is undesirable
• Important for exchange rate to move stably reflecting fundamentals
• Will closely watch impact of exchange rate movement on economy, prices
• Does not think Japan is in stagflation nor will it slip into that

Some jawboning there by Kuroda as USD/JPY threatens a firmer break above 135.00 on the day. But the more pressing issue for the BOJ may be that 10-year JGB yields creeping just above 0.25% on the day, which is the upper bound of their implied cap.

As things stand, Japanese officials are still sticking with verbal threats and warnings for the most part. I still don’t believe we are anywhere near any real market intervention but if USD/JPY does explode and race above 140.00 in a short period of time, then it could be a bit of a trigger warning perhaps.

USD/JPY Live Chart