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USD/JPY Back Towards Lows

JPY
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Shallower moves than those seen overnight, but USD/JPY trades relatively sharply back towards session lows, last Y155.30.

  • Still no official word on potential intervention from the Japanese authorities, with Vice Finance Minister Kanda (the top currency official) previously offering no comment when questioned on the matter.
  • Most suggest that reduced JPY liquidity owing to the Japanese holiday provides a better opportunity for authorities to move the market in their desired direction, increasing intervention risk.
  • Whatever the case, participants are increasingly wary.
  • Technically, the rally stopped short of a resistance at Y160.20, the Apr 1990 high before reversing lower.
  • Note that the trend condition is overbought. A deeper retracement would allow the overbought technical set-up to unwind.
  • Initial key support to watch lies at Y154.01, the 20-day EMA.
  • ING note that “markets will be monitoring any further comments from Japanese officials very closely at this point. First, to have some confirmation that they have intervened, but crucially to hear whether they signal this will be an “intervention campaign” as opposed to a one-off move. The tendency to sell the rally and re-test the officials’ tolerance is something we have seen in other FX intervention instances across the FX market – although the September 2022 experience suggests markets may be reluctant to push it too close to Y160 again.”
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Shallower moves than those seen overnight, but USD/JPY trades relatively sharply back towards session lows, last Y155.30.

  • Still no official word on potential intervention from the Japanese authorities, with Vice Finance Minister Kanda (the top currency official) previously offering no comment when questioned on the matter.
  • Most suggest that reduced JPY liquidity owing to the Japanese holiday provides a better opportunity for authorities to move the market in their desired direction, increasing intervention risk.
  • Whatever the case, participants are increasingly wary.
  • Technically, the rally stopped short of a resistance at Y160.20, the Apr 1990 high before reversing lower.
  • Note that the trend condition is overbought. A deeper retracement would allow the overbought technical set-up to unwind.
  • Initial key support to watch lies at Y154.01, the 20-day EMA.
  • ING note that “markets will be monitoring any further comments from Japanese officials very closely at this point. First, to have some confirmation that they have intervened, but crucially to hear whether they signal this will be an “intervention campaign” as opposed to a one-off move. The tendency to sell the rally and re-test the officials’ tolerance is something we have seen in other FX intervention instances across the FX market – although the September 2022 experience suggests markets may be reluctant to push it too close to Y160 again.”