I think we should get used to seeing the JPY appreciate in overnight markets once the threat of BoJ intervention recedes. As the BoJ said this morning, they are considering unilateral intervention, in other words they would intervene on their own without the help of other central banks.
This means the risk of intervention is at its highest during the Tokyo trading session and that’s why we are seeing short-covering of USD/JPY and the JPY crosses. Once the BoJ goes home for the night, we will likely see the downward pressure re-emerge.
