Yen Strength Puts USD/JPY on Notice at Key 155.00 Handle

The USD/JPY pair has plummeted over 300 pips from its overnight highs in a second day of sharp selling, driven by suspected BoJ intervention and expectations of a hawkish rate hike.

While there's no confirmation of official intervention, the price action has been remarkably smooth, with no signs of disorderly moves typically associated with such actions.

The Japanese yen's strength is also being fueled by Governor Ueda's comments, which have reinforced expectations of another BoJ rate increase later this month. Board member Takata has even hinted at a 50 bp hike at the September 18 meeting.

Furthermore, markets are pricing in around 49bp of tightening by year-end, up from 22bp before the late-July intervention episode. The USD/JPY is also benefiting from a lack of support for the dollar elsewhere, with major currencies and gold rebounding.