• USD/JPY initially dipped but recovered ground on Tuesday amid verbal warnings from Tokyo on possible market intervention
• Japan ramped up warnings on yen intervention and signalled that further currency weakness could prompt a near-term rate hike, as policymakers grow more concerned about inflation pressures from the Middle East conflict.
• In his strongest warning yet on yen intervention, Japan’s top currency diplomat Atsushi Mimura said authorities may take “decisive” action if speculative moves in the currency market continue.
• The remark marked an escalation in tone, as it was the first time Atsushi Mimura used the word “decisive”a term traders typically interpret as a signal of readiness to intervene.
• On the data front, the Tokyo core consumer price index (CPI), which excludes volatile costs of fresh food, rose 1.7% in March from a year earlier, data showed, slowing from a 1.8% rise in February.
• Immediate resistance is located at 160.67(23.62%fib), any close above will push the pair towards 160.70(Higher BB).
• Support is seen at 159.36 (March 30th low) and break below could take the pair towards 158.78(38.2%fib ).
Recommendation: Good to sell around 159.80, with stop loss of 160.50 and target price of 159.40
