USD/JPY climbed to 159.55, its best level of the day and its highest mark this month. The pair also pushed past its post-intervention high of 159.57, keeping the pressure on Japan's Ministry of Finance and the US Treasury. It isn't clear how far either side will let the pair run before stepping back in.
The pair rose 25 pips to 159.55, the pair's highs of the day, as the intervention recovery continues. More significantly, the pair edged above the post-intervention high of 159.57, a level Japan's Ministry of Finance and the US Treasury have been defending since their last intervention.
What the finance ministry and Treasury want is unclear
Just how far the two authorities are willing to go remains an open question. According to InvestingLive: "Yes, they both want the pair lower but how much?" Neither side has signaled a firm ceiling, and the strategy behind their pushback against the rally isn't obvious.
Japan doesn't have limited reserves and may be threatening to sell Treasuries. The US, in turn, is using euro reserves to buy yen — a tactic that also isn't unlimited and risks straining relations with Europe.
Flows behind the rally remain a puzzle
It also isn't clear why the flows pushing USD/JPY higher are so strong. The buying could reflect a straightforward carry trade, where traders borrow in a currency with lower interest rates to fund positions in a currency with higher ones. Alternatively, one-off flows tied to AI financing activity could be artificially holding the yen down.
InvestingLive's technical read puts 160 as the near-term line in the sand. A break above that level could spur another leg of gains, and until then, InvestingLive expects the market to keep tip-toeing toward it.
Source: InvestingLive
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