USD/JPY staged a rebound late Wednesday and ended up closing the day flat near 148. Economists at TD Securities believe that the risk of intervention is high above the 150 level.

USD/JPY may begin the process of forming a top

“The combination of BOJ/MOF activity on intervention and suggestions that tweaks to YCC are possible if inflation and wages improve is a notable shift in rhetoric and may help the pair to begin the process of forming a top.”

“A higher Fed terminal is a problem but we think MOF/BOJ is now the canary in the coalmine; given FX intervention has a poor track record generally, why bother employing it if you did not expect to make some policy shifts of your own.” 

“We think intervention risk is very high above 150 in USD/JPY.”