USD/JPY remains a closely watched pair after breaking again above 150.0, ING’s FX analyst Francesco Pesole notes.  

USD/JPY can go back to the 153-155 mark

“The yen is naturally highly exposed to bond market weakness, but markets are also adding some political risk premium into the yen after the latest polls showed the ruling LPD-Komeito coalition losing support ahead of this week’s election. Political weakening of Prime Minister Shigeru Ishiba can lead to a further delay in the Bank of Japan normalisation plans, leaving the Minister of Finance with the decision to either leave the yen to give in to further selling speculation or jump back into FX intervention.”

“We still think markets will be more sensitive than in previous instances to verbal intervention given the success of the latest round of FX intervention, but for now there is a good chance JPY speculators will keep testing which new level will trigger an MoF reaction.”

“USD/JPY easily broke through the 100-day moving average at 150.7 yesterday. We’ll see whether the 200-day MA 151.3 level offers some better resistance. Lacking some reaction from Japanese authorities, the combination of a stronger dollar and Japan's political risk premium can take USD/JPY back to the 153-155 mark before the US vote.”