• USD/JPY edged higher on Monday but gains were limited as growing concerns about potential yen intervention kept investors on edge.
• The yen has been under pressure from Japan’s low rates and relaxed fiscal stance, though it recovered from 10-month lows late last week when Finance Minister Satsuki Katayama escalated verbal threats of official intervention.
• The yen is down around 6% since Prime Minister Sanae Takaichi assumed leadership, amid investor concern over the substantial borrowing required for her stimulus proposals.
• Market participants expect Japanese authorities to intervene around the 160 yen level or if the currency experiences sharp, sudden moves.
•Looking ahead, Japan publishes Tokyo core CPI, unemployment data, industrial production, and retail sales on Friday. Bank of Japan Board Member Asahi Noguchi speaks on Thursday.
• Immediate resistance is located at 157.66 (23.6%fib), any close above will push the pair towards 158.00 (Psychological level).
• Support is seen at 155.62(38.2%fib) and break below could take the pair towards 154.56 (SMA 20)
Recommendation: Good to buy around 157.40, with stop loss of 156.00 and target price of 158.50
