USD/JPY continues to respect intervention risks, but for how long?

Japan prime minister Takaichi solidified her standing in the snap election over the weekend, with her ruling LDP party claiming a landslide victory and securing a 'supermajority' mandate. That allows her to proceed with her fiscal expansion, spreading her dovish wings in pushing for a suspension of food sales tax for two years.The Takaichi trade has been defined by one with a weakening yen currency but so far this week, the reaction has been opposite that. So, what gives?Well, USD/JPY did open with a slight gap higher on Monday to nudge above 157.50 before Tokyo officials quickly stepped in with verbal intervention. The continued threats of actual intervention is what is limiting any upside, with a weaker dollar yesterday not helping.After the 'rate checks' in previous weeks, that is keeping traders on alert that actual intervention is definitely the next step now. And with the snap election results, it feels like a question of when and not if actual intervention is coming.So far, USD/JPY buyers are not really pushing the limits of Tokyo as seen in the past week or so. The pair is down 0.2% again today to 155.50 levels now, keeping just below its 200-hour moving average (blue line). As such, that reaffirms a more bearish near-term bias for now. That so long as the pair keeps below the key near-term level, seen at 155.62 currently.But so long as the pair continues to hold above the 155.00 mark in general, I'd say that increases the odds of actual intervention taking place. Tokyo officials know very well that they might be forced to draw a line closer to 160.00 and that certainly seems to be a popular view among market analysts at the moment.So even as we see USD/JPY price action continue to "respect" intervention risks this week, it doesn't mean that we are bound for a lower trend in the currency pair.There is no doubt that actual intervention will knock down the pair hard as we have seen with episodes in the past. But similarly, the pair has always shown that it can recover back amid a lack of shifts in the fundamental picture. And in this particular instance, that seems to be how things are playing out once again.As a reminder, USD/JPY dipped lower from 160.00 to near 140.00 after the intervention back in July 2024. However, the pair quickly recovered to move back to 159.00 in a period of just six months.