The pair has taken a nosedive from 145.80 to a low of 142.48 currently as Japanese authorities step in to buy the yen against the dollar for the first time since June 1998. It's a historic move in markets and a massive signal of their resolve. I was definitely one that had been underestimating the government and the BOJ and this move here is surely trying to put to bed any seeds of doubt about their appetite for action.
However, I would be remiss not to question the effectiveness of such a move. There is no doubt that this is a big moment in financial markets but it comes at a rather bad time honestly for Japan. Let's take stock of the situation.
For one, officials are only intervening after a 26% drop in the currency this year. Meanwhile, the BOJ remains at odds with the Fed in terms of monetary policy - in fact they couldn't be at more opposite ends of the spectrum. That fact alone is enough to also make the yen less alluring as a safe haven currency as compared to the dollar amid widening rate differentials.
And unless this is Japan signalling that they are ready to put a stop to the policy divergence, which is odd because the timing comes right after the BOJ said that they would maintain its policy stance as it is appropriate amid current economic circumstances, then officials are still fighting an uphill battle in terms of intervention. And that isn't really ideal.
In any case, it will be interesting to see what is the follow up but at least in the short-term, I reckon the top may be in for USD/JPY but I will not rule out revisiting 145.00 again unless something big changes fundamentally.