[DanRath]

USD-JPY is falling sharply on thin liquidity. Short-term momentum indicators are mixed, as the MACD is still giving a sell signal, but the 14-day RSI and stochastics have entered oversold territory. However, weekly charts remain bearish ahead of the record low of 79.75 from 21 April 1995. On Thursday, Japanese Finance Minister Hirohisa Fujii said that the government is watching currencies very closely given the rapid appreciation of the Japanese yen (JPY). Also, a government spokesman said that the government may be asked to respond to JPY appreciation. However, the finance minister and the deputy finance minister did say that they had no plans to intervene. According to the Bank of Japan (BoJ), the JPY real effective exchange rate (REER), and the JPY nominal effective exchange rate (NEER), the yen is nowhere near its highs of January and February 2009. At that time, the BoJ chose not to intervene in the currency markets even though the JPY REER and NEER were higher than in 2003-04, when the BoJ last intervened in the currency markets. The speed of the appreciation may be the key cause of concern.