USDJPY could climb as high as 150 as the BoJ’s hands are tied
The USDJPY has added for the sixth trading session out of the last seven, this week renewing 20-year highs. The pair reached 134, getting very close to the extremes of January 2001, near 135.
We see that this new momentum is as strong, if not stronger, than what we found in March-April. The first impulse was a 14% weakening of the yen against the dollar for two months.
The central bank and finance ministers started to talk down the yen, indicating that a sharp deterioration was undesirable.
The pullback, triggered by verbal interventions and speculation that the BoJ might reduce QE to tighten policy and protect the yen, only bought time but turned the market around.
In the last days of May, it was clear that the monetary watchdogs favoured continued stimulus and did not change their policy.
