Expect stronger verbal intervention should USD/JPY breach 155 level, says Credit Agricole

A bit of backdrop from yesterday: USD/JPY settles just under 155 level for now, traders weigh up intervention risks

Credit Agricole is arguing that recent developments have pushed USD/JPY towards the pivotal 155 mark and that has prompted verbal warnings from Japan’s finance ministry. However, the current situation still ranks only a 4 out of 7 on the firm’s own intervention scale – considered well below levels that typically precedes FX intervention.

But should there be a break of the 155 level, the firm then expects Tokyo to be more forceful with verbal interventions to start with. And if price action becomes more disorderly as volatility spikes, it will raise the risk of direct action in the market itself.