Foreign exchange participants are waiting with bated breath for Japan's reaction if, or more likely when, USD/JPY hits 155 for the first time since 1990.

Japan on Tuesday issued its strongest warning yet on its readiness to intervene and strengthen the yen, with senior LDP official Satsuki Katayama telling Reuters that "I don't think Japan will face any criticism if it were to act now".

A Reuters poll published last Friday showed 21 out of 23 economists expect Japan to step in at some level to stop the yen weakening further, with 16 of the 21 predicting intervention if USD/JPY reaches 155.
The other five chose 156 or higher.

CFTC data on FX positioning, also published last Friday, showed the net yen short rose to a new 17-year high of 165,619 contracts after USD/JPY vaulted 152.

USD/JPY scaled a fractionally new 34-year EBS high of 154.87 on Tuesday.

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