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Yen has been on fire gaining yet another 400 points this month as USD/JPY sliced through 110, 109 and even 108.00 levels dragging down EUR/JPY along with it. At some point the BOJ is going to react as the strength of yen will begin wreaking havoc with the nascent recovery in Japan.
Although intervention by BOJ is often reversed, the central bank may not be so timid this time as it tries to catch the late shorts flat footed. In the meantime euro continues to hold bid and will likely stay that way until Fed changes its posture. Therefore EUR/JPY could be set to explode on any short covering in USD/JPY. With the pair now holding near the 123.00 support a double bottom could be in the making.