USD/JPY: Dollar Eyes ¥156.00 as Japan’s Intervention Effect Wears Off. Next One Coming?

Yen has been caught in dollar’s grip once again, even as greenback shows signs of weakness across the forex board.

• The USDJPY pair has been surging over the past few trading days in bids to recoup the majority of the losses following Japan’s intervention efforts in early May. To kick off Monday deals, a single dollar was buying nearly 156 yen with the dollar-yen rate hitting a session high of ¥155.90. It’s bad news for Japan and all greenback bears who have been shorting this volatile beast of a currency pair.
• Japan waded into the forex space in the first week of May, selling as much as $60 billion to try and prop up the value of its currency. The plan worked initially but then dollar bulls saw there wasn’t nearly enough bite to the bark. Soon after, the narrative flipped and now more than half of the progress made by Japan’s officials has been erased. When’s the next intervention?
• The defenders of the yen could decide to jump back in with another huge sell wall at any moment. But they’re fully aware that dollar bulls won’t give up so easily. That makes this next step a tricky one — too small an intervention could have little to no effect. But a position that’s too big could use up a lot of firepower and limit Japan’s resources to act again in the foreseeable future.