FxWirePro:USD/JPY holds firm near 160 as intervention fears stay muted

•  USD/JPY edged higher on Wednesday as  economic risks due to Mideast tensions undermine the yen.

•   So far, there has been no evidence of Japanese FX intervention, with market participants noting that it remains difficult for the Ministry of Finance to act against a broadly strong USD environment.

•   At the same time, speculation is increasing that the Bank of Japan may need to tighten policy more than currently expected, with some pricing in a possible 25 bps hike as early as next week.

•  The BOJ is widely expected to raise its main rate by 25 basis points to 1% at its June 15-16 meeting and a second hike sometime this year has also been well priced in.

•Swap markets on Tuesday were pricing in a 93% chance of a BOJ rate hike this month, ⁠up from expectations in May of around an 80% chance.
 
•  Immediate resistance is located at 160.40(23.6%fib), any close above will push the pair towards 160.70(Higher BB).

•  Support is seen at 159.54 (SMA 20) and break below could take the pair towards 158.82(38.2%fib).

Recommendation: Good to buy around 160.20, with stop loss of 159.70 and target price of 160.70