Carry trades remain popular, U.S. data continues to run hot, and markets are fading near-term rate cut bets.
All factors that have contributed to another firm week of gains for USD/JPY, up over 2% and nearing the 150 level.
That said, given the speed of the move from 140 to 148 since the start of the year, naturally, speculation over possible FX intervention has increased.
Traders have been reminded of this threat following recent comments by the Japanese Finance Minister, Shunichi Suzuki, who said that they were closely watching FX.
While this had helped USD/JPY off the highs at 148.80, FX intervention remains unlikely with the pair below 150.
Keep in mind that FX intervention did not occur when USD/JPY was closer to 152 in November.
The Bank of Japan meeting next week is unlikely to provide much in the way of fireworks, with inflation heading lower and wage growth remaining subdued.
The bigger story for USD/JPY is the timing of Fed policy easing.
Recent U.S. data would suggest this has been pushed from March to June, though, with two more non-farm payrolls and inflation reports as well as seasonal adjustments to CPI, markets are reticent to rule out March.
For now, the path of least resistance is for USD/JPY higher with a test of 150, unless the BoJ surprises.
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