USD/JPY: Yen in More Pain as Dollar Nears ¥162 in Pursuit of Highs Not Seen Since 1986

Japanese yen in vulnerable state with officials staying tight-lipped over a potential intervention. Bank of Japan meeting slated for end of month.

• The USDJPY pair continued its advance to higher grounds in the first trades of July. After notching a fresh 38-year high last week, the US dollar was relentlessly pushing toward the ¥162.00 level with a new high of ¥161.80, which was last seen in the distant 1986 (or before most of you were born). For the past 18 trading days, or roughly the whole month of June, the dollar-yen has only had three days in the red.
• Along the way, money spinners had started speculating over the pair’s next destination. Vanguard, a big traditional asset manager, predicted on Monday that the Japanese yen could sink as deep as ¥170 to the dollar if the Bank of Japan fails to shore up the value of its currency. The Japanese central bank is meeting at the end of the month and its decision will be key to narrating the yen’s next move.
• Closer to now, rumors are running rampant that Japanese officials may decide to intervene in forex markets at any moment. In a bid to prop up the yen, Japan’s finance ministry could wade in with a huge yen buy, the effects of which are unknown. The last time Japan leaned against the heavy speculation was in April — as much as $60 billion were plowed in yen longs. Shortly after, the pair was back on track and moving higher.