USD/JPY rally stalls below 148.90 with BoJ intervention eyed

• The US dollar rally stalls right below 149.00.
• Fears of a BoJ intervention and risk appetite have undermined USD strength.
• USD/JPY: Important top at 149.31/150.00 – Credit Suisse.

The dollar has remained hovering on the upper range of 148.00 on Monday, consolidating gains at a 32-year high, following an 8-day rally from the 144.00 area.

Risk appetite and intervention fears put a lid on the USD rally

Investors’ mood improved on Monday, with the market welcoming news that the UK finance minister is planning to reverse most of the aspects of his predecessor’s mini-Budget.

Furthermore, US retail sales showed a certain resilience in consumers’ behaviour and Bank of America has reported better than expected quarterly reports, which has undermined demand for the safe-haven US dollar.

On the other hand, the pair has appreciated well above the level that triggered intervention by the Bank of Japan last month. Japanese authorities have reiterated their warnings of a firm response to avoid rapid yen declines which has set investors on the guard.

USD/JPY: Significant top at 149.31/150/00 – Credit Suisse

According to FX analysts at Credit Suisse, the pair has reached a potential top: “Our ‘ideal’ roadmap would be for a test of trend channel, gap and psychological resistance at 149.31/150.00, but our base case remains to look for a potentially significant top here. “A break and sustained close above 153.00 would suggest it is too early to look for a top, exposing then resistance next at the 160.33 high of 1990.” 

Technical levels to watch