May 1 (Reuters) - Japanese authorities need USD/JPY to close below a key Fibonacci level on Friday as that would help extend weakness into next week. The yen suddenly jumped against the dollar on Friday, a day after Tokyo authorities were widely believed to have intervened to prop up the Japanese currency. Japan's top currency diplomat Atsushi Mimura on Friday said speculation remained rife, a blunt warning that Tokyo is ready to step back into markets after intervening just hours earlier to prop up the embattled yen.

The volatile USD/JPY dropped from 160.72 to 155.49 in Friday's session on the EBS platform, to test the 155.50 Fibonacci level: a 61.8% retrace of the 152.28 to 160.72 (February to April) rise. 155.49 was the lowest level since February 25. A daily close below the 155.50 Fibo on Friday would be a bearish sign for USD/JPY.

The 61.8% retracement is known by some as the "golden ratio" in the sequence due to its outsized significance in determining the direction of the price action.

While direct intervention is a strong political tool to correct market forces, it usually does not change the long-term dynamics of a currency pair's direction.

Complicating the picture further: Japanese markets will be closed on Monday through Wednesday for the Golden Week holiday, which could cause wild swings in the yen due to thin liquidity, analysts say.
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(Martin Miller is a Reuters market analyst. The views expressed are his own)