The article discusses the current state of Treasury yields and its impact on the USD/JPY currency pair. It mentions that Treasury yields have slightly decreased, but this has not had a significant effect on the USD/JPY exchange rate, which currently stands at 149.90. The article poses the question of what will happen if the USD/JPY breaks the 150 level, speculating that the Japanese Ministry of Finance (MOF) may intervene, potentially causing further downward movement. However, the author also considers the possibility that there will be no intervention and highlights the next significant level to watch, which is 155 according to Goldman Sachs.
If the 150 level is breached without intervention, the article suggests that the USD/JPY could quickly reach the next major level of 155. However, the fast pace of this movement may prompt the MOF to take action. The author also refers to a previous spike in the exchange rate last October, reaching 151.94 before a sharp reversal, which indicates that the market previously allowed long positions to accumulate before eliminating them. Therefore, investors should be cautious about the potential for market volatility and intervention.
In summary, the article focuses on the current state of Treasury yields and its implications for the USD/JPY exchange rate. It highlights the possibility of the 150 level being broken and discusses the potential responses from the Japanese MOF. Additionally, it mentions Goldman Sachs’ outlook of the exchange rate potentially reaching 155. However, the article also warns about the potential for a fast and volatile movement, which could trigger intervention.