JPY Weakening Again

The Japanese Yen is coming under fresh pressure this week, despite recent suspected intervention from Japanese authorities. While details regarding last week’s volatility in JPY FX rates have yet to be disclosed, traders are expecting the BOJ to detail its involvement in the moves, similar to what we saw last September when the bank intervened. Japan’s top currency official Kanda told reporters that details of the intervention will be disclosed at the end of the month. Meanwhile, with USDJPY turning higher once again, risks of further intervention are seen, particularly if the pair gets back towards 160.

BOJ Refrains from Comment

Speaking today, BOJ governor Ueda reaffirmed the bank’s message that it won't comment specifically on FX moves. Ueda instead told reporters that the bank continues to monitor FX moves, noting the need to protect against rapid, one-sided moves which are undesirable for the broader economy.

Hawkish Fed Commentary

The risk now is that with USD rising again on the back of hawkish Fed commentary yesterday, Japanese authorities will be forced to take further action to supress FX rates. However, without a shift higher in monetary policy, speculators are betting that any reaction in markets will be short-lived. As such, the BOJ and Japanese government will need to be very strategic in order to avoid wasting the impact of any actions it takes. Looking ahead, further Fed commentary later today along with US data and a slew of Japanese data due over Thursday and Friday.

Technical Views

USDJPY

The correction lower in USDJPY has found strong support into a test of the 151.81 level support. Price is now fast approaching a test of the 156.18 level resistance and with momentum studies turning higher here, focus is on a continued push with 158.28 and the YTD highs above as the clear target for bulls near-term. Downside, 151.81 and bull channel lows remain key support to watch. 

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