USD/JPY: At 150, a market reaction can occur that looks like an intervention – Commerzbank

USD/JPY still trades around the 149 level. Economists at Commerzbank analyze the pair’s outlook.

The risk of long USD/JPY positions seemed too high

Given Tuesday's exchange rate move (chart below), why is no one really sure if we've seen an intervention? Well, there had been a lot of speculation in the run-up that the MOF might take action on a break of the 150 level in USD/JPY.

Therefore, it stands to reason that quite a few market participants wanted to sell USD/JPY as soon as this event occurred – because then the risk of long USD/JPY positions seemed too high. If many do this at the same time, a market reaction can occur that looks like an intervention.

Source: Bloomberg