BOJ (Bank of Japan) is sending warning signals to the market that if the Yen continues strengthening, it may have to intervene and weaken its currency. If the BOJ does intervene, this would be the 3rd time in about a year that we witness the Yen sell-off. It should be noted that the previous intervention have failed to sustain a long-term impact.

USD/JPY has reached the 77.04 low, hitting the 19 weeks low. As the currency pair is getting closer and closer to the 76.25 low (March 19th, 2011), the BOJ has stepped up the speculations of a “solo intervention” to weaken the Yen. Don’t expect the U.S or the EU to coordinate with the BOJ an “international” intervention, since they are facing their own economic dilemmas.

After a break to nearly 76.00 on Thursday, the USD JPY rallied overnight after the Group of Seven nations agreed to take steps to curb the Japanese currency’s rapid rise. The wave of coordinated intervention by the global financial powerhouse also known as the G-7 is an attempt to stabilize the Yen and bring it back to more respectable levels following the post-earthquake rally.

USD JPY drops huge and hits record high of 76.28. Intraday bias remains on the downside, as long as the 83.95 major resistance line is not broken. On the downside, all major support lines have been broken (80.22 and 79.75) and the currency pair is on a “free downfall” mode.