It’s about testing the waters now, but the idea is not to get too carried away. This is the line of thinking of the buyers currently pushing USD/JPY above the 155.00 mark. The pair finally broke the single digit level in US trading yesterday, but there is no major overshoot yet. It is currently trading around 155.45, its highest level since 1990.
USD/JPY daily chart
From a technical perspective, the April 1990 high is only 160.40. This is arguably the next key tier to watch in the charts. At the same time, it appears that the line in the sand is shifting as Japanese authorities are referring to the 160 mark as being a more critical mark than the 155 mark.
That being said, the pace of any decline in the yen is also a pretty big factor in all of this. And this is also why USD/JPY buyers are rather cautious and do not exceed the limit to trigger a reaction from Tokyo.
Either way, we have less than 24 hours until the BoJ’s policy decision tomorrow. This will have to be taken into account, particularly during the Ueda press conference. The language he uses will be closely scrutinized and will surely be a hit or miss moment for the yen this week.
For now though, buyers are certainly dipping their toes in the water to see if the line in the sand has truly changed on USD/JPY. I think we will only have confirmation of this tomorrow after the BoJ, and not before the market closes as well.
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