• USD/JPY is trading on a slightly firmer footing, though the risk of Japanese authorities intervening in the foreign exchange market remains a key factor limiting further upside.
• Finance Minister Satsuki Katayama said on Tuesday the authorities stood ready to respond in the currency market as needed and refrained from commenting on recent exchange-rate moves.
• Japan spent 11.7 trillion yen since April to support the yen in what was the largest-ever intervention round in a month in terms of size. The yen jumped to around 155 per dollar from 160.725, but later resumed its decline.
• Markets are now focussed on a speech by Bank of Japan Governor Kazuo Ueda on Wednesday for possible clues on whether a rate hike could follow later this month.
• The BOJ kept interest rates steady in April, but strongly signalled the chance of a near-term hike due to mounting inflationary pressures.
• Immediate resistance is located at 160.00(Psychological level), any close above will push the pair towards 160.46(23.6%fib).
• Support is seen at 158.67 (38.2%fib) and break below could take the pair towards 158.55 (SMA 20).
Recommendation: Be on side-lines
