USD/JPY Tussles at 160 as Intervention Fears Rise
The USD/JPY pair has been experiencing volatility as it approaches the psychologically significant level of 160. According to MUFG's Teppei Ino, this resistance level has acted as a barrier for traders who are watching for possible Japanese intervention.
The pair opened near 159 and repeatedly tested the 160 level throughout the week. On August 17, USD/JPY slipped below 159 during Tokyo and European trading before reversing course due to improved US economic data and rising oil prices.
However, as the pair continued to edge higher on August 18, it struggled to extend gains at the 160 level. This led to a gradual fall back toward 159 during Tokyo trading on August 19.
The situation changed on August 20 when the US Treasury announced plans to expand UST buybacks from September. This triggered broad-based dollar selling, pushing USD/JPY to a low of 158.03 early in Tokyo trading.
However, as UST yields recovered and returned above their previous levels, the pair rebounded, returning to above 159 and erasing the previous day's decline. The yen also weakened broadly outside the USD/JPY, with EUR/JPY rising above 185 for the first time since July 31.