USD/JPY daily chart
The pair has seen a very strong recovery this week, with dip buyers showing some courage. Japan intervened in trading last week to pull the pair down to 152.00, helped by some weak US data. But since then, one-way traffic this week has been on the rise to near the 156.00 level.
The 50.0 Fibonacci retracement level is approaching near this level and this will be one of the levels to watch as we look to conclude the week.
So, what's next for USD/JPY?
For now, Japanese authorities seem to have little desire to get involved in matters this week. This is as long as the pair remains below 156.00 and does not exceed perhaps 157.00. A lot about this pair at the moment is psychological.
If we stay here until next week, all eyes will be on the US data after that to see how that leads to the next directional move. This will not apply to the dollar, but to the bond market as well. Remember that the latter is also a major factor influencing USD/JPY.
In short, Japan will likely want to wait for next week's US data before assessing the USD/JPY situation again. This is as long as there is no higher overflow to force them to intervene again. For now, dip buyers remain confident. But changing the Fed's expectations could help change this conviction in the short term.