June 30 (Reuters) - USD/JPY could see much bigger gains in the coming sessions due to a lack of action from Japanese authorities. The yen slumped to levels not seen since 1986 on Tuesday, leaving traders on alert for any potential intervention from Japan to shore up the persistently weak currency. Japan reiterated on Tuesday that authorities stood ready to respond to currency moves, keeping the rhetoric unchanged despite the yen's slide to a four-decade low.

Elevated USD/JPY has seen a 161.91-162.41 range, on Tuesday, according to EBS data. Spot could well climb further to test the 163.00 psychological level, a clean and sustained break above which in turn would put Japanese authorities under further pressure to step in. However, FX traders should be aware that the relationship between USD/JPY and EUR/JPY is broken, meaning gains in the cross will likely be limited as it is currently carrying significant euro downside risks. The 30-day log correlation reading between the two currency pairs is very close to zero.
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(Martin Miller is a Reuters market analyst. The views expressed are his own)