Some excitement has been generated in recent days by the strength of the Japanese currency, with USD/JPY declining from a high of 78.28 mid-week to below 77 overnight. One possible explanation being forwarded by a few commentators is that the yen is attracting safe-haven demand because of those intractable Greek debt talks. More likely is that both the dollar and the pound have fallen out of favour after the Fed and the BoE intimated a couple of days back that more quantitative easing may be required. In addition there have been some aggressive purchases of the yen by local corporates which are natural buyers. Also, the dip from above 78 to just above 77 simply reverses the jump witnessed on Tuesday and early on Wednesday.
USD/JPY has essentially been trapped in a 76-78 range for the past six months. With the BoJ ready and able to protect further yen strength using its enormous war-chest of intervention money, only the foolish would take it on. USD/JPY has been dull for a very considerable time, and it is likely to remain that way.