Yen-tervention likely to happen in the 161 to 163 range - Nomura

We already got a sense of that with the stronger verbal intervention last week, before some market optimism helped to keep further dollar strength in check. But as the volatility swings continue and the Middle East conflict drags on, the risks continue to stay heightened for the dollar to gain and for the yen to stumble even more.

Nomura argues that while actual intervention from Tokyo might deter traders from diving more into yen shorts, it is tough to fight the market trend if the US-Iran conflict continues to underpin oil prices. They note that:

"Since USD/JPY briefly rose above 160 last Friday , the Japanese authorities have stepped up verbal intervention . While growing caution over actual intervention is seen as limiting further upside in USD/JPY, unless there is a clear improvement in the Middle East situation and a more substantial correction in crude oil prices, upward pressure on USD/JPY is likely to persist."

As for the potential timing of action, they see it perhaps being at a point where the 160 threshold starts to become a little more slippery so as to invite further upside pressure. As such, they wager that Tokyo might come in around the 161 to 163 region:

"Fundamentals, including the BOJ Tankan, also remain solid , and if this week’ s BOJ branch managers’ meeting increases the likelihood of an April rate hike, JPY is likely to find near-term support. On the level at which intervention may occur, caution is warranted over the possibility of actual JPY-buying intervention in the 161-163 range."