Has anyone noticed the recent action in the Yen? Today the dollar soared against every major currency on the Fed comments - up 1.5 points vs the Euro, biggest rally against CAD for 5 years, cable and the aussie were also down over 1%. Yet the one currency that has a central bank selling hand over fist actually ends the day down the least relative to all the others. In any normal market the Yen would be down 1-1.5 points merely on the Fed comments, and with the BoJ intervention it should be off 2 points at least. The fact that it's barely budging is giving a pretty strong signal IMO. Every BoJ intervention has followed the same pattern - initial rally, then quickly sell back down to the pre-intervention level. But each time the rallies are smaller and last shorter than before. IMO if the BoJ said tomorrow that it would no longer intervene, you could easily see a 3 point spike in the currency. At current prices it seems like demand is swamping supply, and the only seller is the central bank. Basically I think there could be a serious rally coming on in the Yen. The risk appears pretty limited, I would say 110-111 is a reasonable stop, or the original 116 breakout level if you want to give it more leeway. You could buy some cheap 111 calls to hedge your risk. On the reward side, I think 101-102 is an obvious target, the high from 1999, but we could easily blow through there and into the low 90s IMO. Any thoughts? I am already long but really tempted to put on a big position here.