The USDJPY May Be Heading Much HigherUnited States Dollar / Japanese YenCMCMARKETS:USDJPYcmcmarketsThe USDJPY is rising to 156.70 after Prime Minister Takaichi nominated two new members to the Bank of Japan, who are seen by the markets as economic reflationists. This has again worried the market about the fiscal policy that may follow the new government, leading to a weakening of the yen. It also means the USDJPY is now rising above a downtrend that briefly formed over the past couple of weeks, extending from the 159 FX rate on 23 January. The next level of resistance for USDJPY may be at 157.50, but this raises questions about whether USDJPY will challenge the recent highs around 158 to 159 that followed the Bank of Japan rate decision. Given this rise in USDJPY, it would seem that the recent strength following the Bank of Japan meeting was nothing more than a 50% retracement of the trend established in the middle of September. It is also likely to increase the risk of government intervention in the FX market, because the 159 to 160 region on USDJPY has been an area that has triggered intervention warnings, with the last "rate check" at the end of January. If USDJPY continues to rise, the odds of intervention would seem to increase, and at this point the market may not even fear such a move if it believes that fiscal policy warrants a weaker yen. Written by Michael J. Kramer, founder of Mott Capital Management. Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.