FX Intervention Possible If USD Tumbles

Many traders see little chance of USD-buying intervention, but Bank of Tokyo-Mitsubishi UFJ chief FX analyst Osamu Takashima warns such probability "could be higher than markets currently think". For now, intervention unlikely, but possible if EUR/USD tops 1.6000, USD/JPY gets below 95.00. Reasons noted: (1) Authorities, even including ECB, may think stronger USD may help ease oil-driven inflation worldwide; "there's an inverse correlation between the dollar and oil. They may feel like stemming dollar falls to halt increases in oil prices"; (2) "Europeans seem to have a sense that the euro has risen too much and that even if it falls a bit, it won't cause problems"; (3) G7 has left room for joint FX steps at time of excess volatility; so, despite their calls for higher CNY, "they have an excuse" to intervene