USD/JPY made a run for stop/loss orders perched above the 87.50/55 area but stalled just short, reaching 87.49 thus far. Technically, a sustained break above 87.50 would ease considerably the downside pressure on the dollar. To my mind, it would signal a bottom is in place for the medium-term.
A further Japanese stimulus package combined with efforts by Japanese authorities to weaken the JPY (at least verbally) are helping undermine the JPY as are firmer US bond yields. Traders are concerned that Japan’s spending is spinning out of control and that they will soon become net importers of capital rather than their traditional role of capital exporter to the US and beyond.