The Japanese yen has once again made headlines as it trades against the US dollar. The currency pair is currently testing the 145.90 level, breaking even higher will see the US dollar/yen trading at its lowest level since August 1998. The last time the Bank of Japan intervened in the foreign exchange market was on September 22nd, when the US dollar traded around 145.70 yen against the Japanese yen, buying approximately $21 billion yen to stabilize the currency. The actions of the Bank of Japan pushed the US dollar/yen back to around 140.00, and subsequently the market decided to test the Bank of Japan again and push the currency pair higher. Since then, the yen has been weakening against the strong US dollar.

Bank of Japan (BoJ) - Foreign Exchange Market Intervention

The yield of US treasury bond bonds, as the driving factor for the strengthening of the US dollar, continued to rise, as the market expected that the Federal Reserve would continue to raise interest rates significantly. The current yield of UST two-year treasury bond is 4.36%, which was the last level in August 2007.

If the Bank of Japan decides to exit the foreign exchange market at these levels, the US dollar/yen could easily move, testing the high of 147.63 in August 1998. If this level is broken through, it will become difficult to find resistance from charts more than 20 years ago, with only 150 "big numbers" highlighted. The yen has depreciated by over 25% against the US dollar this year, and US authorities will be eager to see this depreciation stop in order to prevent Japan from gaining too much trade advantage due to currency weakness. It is very likely that we are approaching the high point of the US dollar/yen.

For all data releases and economic events that affect the market, please refer to the real-time daily foreign exchange calendar

Retail trader data shows that 20.64% of traders are net long, with a ratio of short to long of 3.85 to 1. The number of net long traders increased by 10.57% compared to yesterday and 7.21% compared to last week, while the number of net short traders increased by 6.16% compared to yesterday and 10.81% compared to last week.

We usually take a reverse view of crowd sentiment, and the fact that traders are net short suggests that the US dollar/yen price may continue to rise. The net short position is less than yesterday, but more than last week. The combination of current emotions and recent changes has given us further mixed biases in US dollar/yen trading.

USD/JPY hit a new 24 year high due to continued JPY downturn (dailyfx. com)