USD/JPY bulls are playing with fire.
The pair rose for the seventh straight day after the surprisingly strong US Services Purchasing Managers' Index (PMI) was released. A reading of 55.1 is the highest level in 26 months and well above the consensus of 53.7.
The report sparked widespread US dollar buying and pushed USD/JPY closer to the 160.00 line in the sand. This is where the Japanese Ministry of Finance last intervened, sending the pair down to the 151.85 level.
Daily chart of USDJPY.
A close here would be a new 34-year closing high for the pair. Yesterday, I wrote about five reasons why the pair is rising.
Last time, officials allowed a short breakout at 160.00 before entering the market. There is a possibility they could let it break those intraday highs or reach 165.00 before entering. The official lines are that they do not set price levels but want to avoid disorderly movements.