USD/JPY is trading at 80 again, which begs the question of whether or not it’s time to buy the pair.

The most obvious reason to buy is the looming threat of intervention. The Bank of Japan (BOJ) vigilantly guards against a strong yen because yen strength hurts the competitiveness of Japanese exporters.

Last year, the BOJ intervened when USD/JPY hit 82.88. In March 2011, it intervened again when a speculative attack took USD/JPY below 80.

The level 80 is still understood to be the trigger point for BOJ intervention.

Given the phenomenal success of the intervention in March, speculators likely respect that level, so 80 may be the floor of USD/JPY.

From this perspective, the trade thesis of long USD/JPY trade bears limited downside and allows for a tight stop.

Nomura Securities offered several additional reasons to support this trade thesis.

- Interest differentials: BOJ will ease further while Federal Reserve officials are talking about a monetary exit.

- Toshin (investment trusts): Japanese investors will continue to buy foreign assets.

- Smaller trade surplus: Supply disruptions of manufacturers in Japan will continue to hurt Japanese exports.

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