Japanese Market Commentary - Wednesday, March 27

By James Harte of Tickmill

Wednesday, March 27, 2024 5:59 AM EDT

Intervention Chatter

USDJPY is reversing heavily today following further comments from Japanese officials after the Yen weakened to its lowest level against USD in 34 years. After hitting 151.97, Japanese Fin Min Shunichi Suzuki warned that authorities wouldn’t hesitate to intervene against disorderly FX moves. Suzuki announced that the government will hold a special meeting today to discuss the current moves in markets. This follows comments made on Monday by Japanese Vice Fin Min Masato Kanda who warned that authorities stood willing to act if needed. Kanda is also due to hold a briefing after the meeting today.

BOJ & Government Warnings

JPY has popped higher on the back of the comments as traders assess the very real risk of intervention. Suzuki told reporters earlier today "Now we are watching market moves with a high sense of urgency.” Adding that “If there's excessive moves, we will take decisive steps and not rule out any options. "BOJ governor Ueda was also seen offering reassurance, noting that the bank would continue to assess currency moves and their impact on the economy.

Volatility Risks

With risks of intervention growing, USDJPY looks to have limited room to run to the topside. With that in mind, a deeper correction is likely here. However, speculators might still look to test the BOJ’s resolve and push the rate back up, creating plenty of near-term volatility risk in JPY.

Technical Views

USDJPY

The rally in USDJPY has stalled for now into the 151.81 level resistance. With momentum studies weakening, a correction lower is likely here with 148.98 the next support to note. Below there, 145 sits as the deeper bear target. To the topside, 155.19 is next for bulls should we break higher.

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