Recent price action in the pair hints at a continuation of the long term downtrend. Following a new year's rally with the price of the USD/JPY climbing to 83.70, the pair has begun a new decent with last week's low coming in at 81.80.
Renewed strength in the yen could spark another round of market intervention by the Japanese Ministry of Finance (MOF). In mid-September the MOF intervened in the FX market in order to weaken the Japanese yen.
As the JPY continues to strengthen, traders should consider the MOF may intervene again should the yen push to new highs. A mark for traders to watch could be sustained selling of the USD/JPY below the 82 level.
Tuesday's meeting by the Bank of Japan and the accompanying monetary policy statement may offer harsh rhetoric for those FX traders that are intent on testing the will of Japanese policy makers to once again intervene in the foreign exchange market.