Based on the price movements, there can be a variety of ways to label the waves. I have chosen the wave counts as shown to be my most preferred count. Essentially, from 125.80, there was wave(A) to 116.00, wave(B) rebound to 121.60 from which wave(C) started. Wave(C) down consists of 5 waves in wave(1), wave(2), wave(3), wave(4), wave(5).
I project that wave(5) of wave(C) of wave(4) will end at 107.00-107.30 within the next 1 week. After which, the big wave(5) rally shall begin. The initial reverse from the wave(4) low can propel USDJPY to 112.00-113.00 within a fortnight of the low.
What could be the catalysts for such a bottom to form? We note that the current sell down in USDJPY was largely due to a loss of confidence in BOJ's ability after they announced a negative interest rate policy, as well as reduced expectations of the pace of Fed rate hikes. The market had been positioned long USDJPY for many months and was caught off guard. As a result, large unwinding of long USDJPY positions and commercial selling from Japanese exporters triggered the rapid fall from 121.60.
However, the fall in USDJPY since January 2016 has pushed it into very oversold conditions. It is where it will be more sensitive to positive news rather than more negative news. By and large, Fed and BOJ are still in divergent policies in the foreseeable future. The fall in USDJPY goes against this divergence and should be a temporary phenomenon. It merely takes a sudden change in expectations, such as an imminent Fed rate hike, to trigger a strong USDJPY rally.
We are now in a new Japanese financial year. Their policies have been geared towards pushing GPIF to invest overseas as well as Japanese stocks (rather than JGBs). More aggressive moves by government agencies can be expected especially with USDJPY well below the "fair range" of 115-120 perceived by Japanese corporates and government.
Then, there is the ever present threat of intervention by BOJ or even a concerted intervention by major central banks. The next BOJ meeting is April 27-28. Then there is the G7 Finance Ministers meeting on May 20-21, followed by G7 Summit on May 26-27. The G7 will be meeting in Japan.
I see USDJPY bottoming before BOJ's April 27-28 meeting, possibly within this week (April 11-16).