USDJPY Enters Intervention Territory. What Next?

Summary:
• The USDJPY trading pair's crossing into the 150.00 territory will likely attract action by the BoJ, but a verbal intervention wont do it.

The US dollar extended its gains against the Japanese yen on Tuesday as traders continued aligning themselves with increased chances of higher-for-longer interest rates. USDJPY traded at 150.96 at the time of writing, up by 0.07 percent on the daily chart. The pair has gained 1 percent in the last week and 5 percent in the last month, underlining a prevailing bullish control.

Traders are pricing in on 25 basis points cut by the Fed in November as per the CME FedWatch Tool. Meanwhile, the Bank of Japan isn’t expected to raise interest rates for the rest of the year, as it seeks to balance its export bill and domestic economy. However, the pair’s break past 150.00 means it has entered a potential BoJ intervention point, going by previous actions by the central bank. That could limit the upside by USDJPY, although traders will likely pay less attention to verbal intervention.

Besides the interest rate sentiment, the dollar is also supported by its stronger safe haven standing relative to the yen amid rising perception of an escalation of the Middle East conflict. In addition, a rise in US treasury yields has added strength to the dollar. Yields on benchmark 10-year bonds are at 4.214 at the time of writing, their highest level in nearly four months.

USDJPY Prediction

USDJPY pivots at 151.07 and the buyers will be in control if they maintain action above that level. The upward momentum will likely encounter initial resistance at 151.20, but a stronger push could breach that mark to test 151.40.

Conversely, the sellers will be in control if the pair moves below 151.07. If that happens, the first support could come at 150.91. However, an extended bearishness could break below that level and invalidate the upside narrative. Meanwhile, the decline could extend to test 150.71.