The pair is flat on the day now at 151.42 as it continues to hang near multi-year highs since last week. The 2022 and 2023 highs of 151.90-94 is the key resistance region in play at the moment for USD/JPY. Hold below and sellers can look to build off that ceiling to push price back lower. But break above and the sky is the limit for the pair as there is little technical resistance left until above 160.

As such, the only thing that can rein in any USD/JPY breakout from here is intervention by Tokyo. And the warnings are growing louder in the last few days. Earlier today, Japan’s top currency diplomat Kanda was rather vocal about the situation. He said that the yen’s weakness did not reflect fundamentals and warned against the recent „big slide“.

Kanda noted that the latest yen moves were „speculative“, adding that „I feel something strange about it“.

That’s a suggestion that Tokyo could look to get more involved if the one-sided move continues. And it comes despite the BOJ putting an end to negative rates and scrapping its yield curve control policy last week.

Looking at the situation, I reckon Tokyo won’t look to intervene so long as the technical ceiling above holds. A break higher will tilt the balance of risks for the yen, which could lead to a much sharper decline in the currency next. As such, the potential lines for USD/JPY intervention look to be closer towards 154 to 155 in my view.

For now, the bond market will remain a key spot to pay attention to. 10-year Treasury yields are at 4.225% and so long as they stay underpinned, chances are USD/JPY will follow as well.

This article was written by Justin Low at www.forexlive.com.