Market tests BoJ with yen at 1986 low

26 Haz

The Japanese yen tumbled beyond 160 per USD, marking its weakest level since 1986. This is a critical threshold that previously prompted intervention by Japanese authorities. In May, Japan depleted a record ¥9.8 trillion to bolster the yen.

Masato Kanda, Tokyo's top currency diplomat, attempted to mitigate the surge above 160.00 with strong verbal interventions, yet he mentioned no specific target level. This ambiguity was perceived by some market participants as a green light to drive the pair to 160.82.

The lack of immediate intervention from the Bank of Japan post-160 breakout raises questions: Does this signal an open path to the next psychological levels?

In June alone, the yen has slipped roughly 1.5% against the dollar, extending its year-to-date decline to about 13%. Should there be a retracement from the previous 160 intervention level, buying interest is expected to resurface around the 158.00 support, aligning with the 38.2% Fibonacci retracement level.

Fundamentally, traders are eyeing tomorrow's US Jobless Claims data, followed by Tokyo CPI and US PCE releases on Friday, which could be critical in shaping the next moves in the yen.