Fresh Multi-Year Highs Despite Elevated Intervention Risk

USD/JPY hit a fresh multi-decade high of Y151.97 in Tokyo trade, before reversing to the Y151.35 area on news of an imminent meeting between the BoJ, Japanese FSA & MoF.

• Japanese Vice Finance Minister Kanda will give a press briefing after the meeting, which has promoted speculation re: intervention.
• The outcome of that meeting will obviously be key intraday.
• Intervention risk was already elevated at current levels. Firmer rhetoric warning against further JPY weakness has been deployed by several Japanese officials this week.
• From a pure technical perspective a break above Y152.00 would expose the upper boundary of the uptrend channel drawn from the September ’12 low (152.59).
• The channel top was tested and pierced in October ‘22 and in October '23 - see chart below.

Source: MNI - Market News/Bloomberg

• Our technical analyst previously noted that recent gains suggest that we are likely to see a third challenge of that channel top.
• Longer term, a bullish monthly close in March followed by a strong April would highlight a clear break of the '98 high.
• Conversely, if the channel holds on a third test then there would be increased risk of a deeper pullback/significant reversal, at least from a purely technical standpoint.