Ella 
The recent pullback in U.S. Treasury yields has tempered the dollar’s strength.
After the Bank of Japan intervened twice in the yen last week (the yen has fallen to a 34-year low of 160 yen against the US dollar) and the non-agricultural sector was weaker than expected, the USD/JPY fell back to a three-week low of 152 last Friday. JPY.
While the standoff between hedge funds and Japanese authorities continues in the spot market, tensions have eased somewhat after USD/JPY rebounded to 153. On Friday, Japanese Finance Minister Suzuki hinted at possible measures to address excessive FX volatility, taking much of the momentum out of the USD/JPY long squeeze as traders interpreted it as a “fait accompli” from the Finance Ministry.
Regarding USD/JPY trading, I suspect traders will enter day trading mode, especially after Finance Minister Suzuki’s comments brought some heat to the USD/JPY long squeeze. We may be entering a broader consolidation phase, with the 152 to 155 levels suggesting intervention was more successful than expected. However, we can also return to the dynamics of the divergence between the Unsecured Overnight Offer Rate (TONA) and the Secured Overnight Financing Rate (SOFR), which could push USD/JPY higher. Essentially, we are entering a price discovery phase this week rather than a directional determination phase, especially with no important U.S. economic data to be released.
