Japanese Yen Commentary- Friday, June 14

USD Rallies Post-BOJ

USDJPY was seen rallying to its highest level since the April FX intervention place on the back of the BOJ meeting overnight. As expected, the bank held headline policy in place while signaling that it was in discussion over reductions in bond purchases and would announce its decision at the next meeting on July 31st. The reaction in JPY shows that traders were a little disappointed to not get an announcement this time around with JPY weakening post-meeting.


Cautious BOJ Approach

The initial read on last night’s meeting is that the BOJ is trying to be cautious in unwinding its ultra-loose monetary policy. The issue, however, is that with speculative traders still punishing the Yen, unless given a clear show of strength from the bank (a rate hike or quantitative tightening) JPY is likely to continue lower.


Intervention Risks

USDJPY is now around the level which sparked intervention from Japanese authorities in April, roughly 160. The obvious risk is that if price continues to push higher we will see fresh intervention. As such, there is plenty of volatility risk in USDJPY currently which traders need to be wary of.


Technical Views



The rally in USDJPY has seen the pair breaking above recent highs to test the 158.28 level once again. This has been a major resistance level for the pair and this initial test has found heavy selling. However, while price holds above 156.19 and stays within the bull channel, focus is on a continuation higher and a fresh of the level. To the downside, bull channel lows will be key support to watch ahead of the deeper structural level at 151.81.

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