08:48 AM EDT, 04/18/2024 (MT Newswires) -- The Japanese yen (USD/JPY) could rise another six yen against the dollar in the event of any further currency intervention from the Ministry of Finance but selling EUR/JPY is a better way to trade this, according to Spectra Markets' Brent Donnelly.

Japan's yen underperformed all other G10 currencies after USD/JPY rose 0.1% to 154.49 during the European morning on Thursday and as the effect of the government's frequent verbal intervention appeared to wane.

The yen was the only G10 currency to fall against the dollar and did not benefit much when Japanese, South Korean and US finance ministers released a joint statement expressing concern about the recent losses of the yen and won on Wednesday.

"My view is that each 10 pips we move closer to 156.00 dramatically raises the odds of intervention. I think 156.00 is the max we get to before the MOF comes in," said Brent Donnelly, president at Spectra Markets, in a Wednesday note to clients.

Donnelly cites his own currency trader experience of watching the yen and local officials, as well as comments recently made by Vice Finance Minister for International Affairs Masato Kanda for thinking that 156 in USD/JPY is something of a red line for the government.

This is after Masato Kanda said in February that a 10-yen rally in USD/JPY over one month constitutes a rapid FX move of the kind that could be likely to elicit official intervention. The last official intervention was in October 2022.

Donnelly has advised clients to sell EUR/JPY instead of USD/JPY as the former runs the risk of also becoming bogged down by divergence between the European Central Bank and Federal Reserve.

He advocated selling EUR/JPY at 164.10 on Monday with a target price of 160.16 and a stop loss of 165.76.

"The other takeaway is that both of the big interventions yielded six big figures (4%) of downside in USD/JPY. I would guess the next one will yield something very similar," said Donnelly.

The yen's losses have slowed as it has approached the government's various perceived red lines in recent weeks though discussion of the yen has increased among analysts and market participants.