USD/JPY holds just beneath 159.50 on Thursday, ahead 0.05% across a range of forty-two pips, a fifth consecutive session of grinding higher without getting anywhere.
The pair remains beneath a declining 50-day Exponential Moving Average (EMA) that now sits directly on the 160.00 handle, comfortably above a rising 200-day just under 158.00, with the daily Stochastic Relative Strength Index (Stoch RSI) near 69 and climbing
The intervention has been half given back Late July took the pair to a high just short of 164.00 and then broke it, in the first joint operation between Tokyo and Washington since 1998, down to the 155.00 area inside two sessions. A record single-session commitment of 8.45 trillion Yen was followed by roughly 5.3 trillion more. Four weeks on, spot sits within about a dozen pips of the exact midpoint of that move, which means the market has taken back close to half of what the largest currency defence on record removed.
The reason it did not hold is that nothing in the operation touched the thing driving the pair. Japan’s policy rate is 1.00% against a US target range of 3.50% to 3.75%, a gap of roughly two and a half percentage points, and an intervention moves the level while leaving the carry intact. Even a September move to 1.25% still leaves better than two points of it, which is why the question has stopped being whether the increase arrives and become whether it is the opening of a cycle or another single step.