The dollar/yen is trading almost flat on Friday after intervention by the Bank of Japan (BOJ) fueled a volatile response from the Forex pair in the previous session. The move but the dollar/yen on course for its first weekly loss in more than a month on Friday.
On Thursday, Japanese authorities intervened in the foreign exchange markets for the first time since 1998. The timing of the move was impressive, after the BOJ announced it was keeping interest rates ultra-low and ahead of the Japanese holiday. ‘today.
At 08:00 GMT, USD/JPY is trading at 142.456, up 0.084 or +0.06%. On Thursday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $65.64, up $0.69 or +1.05%.
With the BOJ’s monetary policy diverging from that of the rest of the major central banks, in order to successfully drive the Japanese yen higher, it will need to continue to hit the market with a series of intervention moves, otherwise the yen will resume its upward trend. decrease.
This is not a situation where the currency is manipulated. Yen weakness is fueled by policy divergence. The US Federal Reserve, for example, is raising rates and the BOJ is keeping rates extremely low. As long as this trend continues, investors will be looking for the highest yield. This means that the US dollar will remain the most attractive asset.
Conditions could turn bearish for USD/JPY if the BOJ takes a more hawkish stance in intervening. If this were to happen, the Forex pair would plunge.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. However, the momentum shifted lower on Thursday when the minor trend turned lower and USD/JPY formed a potentially bearish closing price reversal top.
A trade across 140.353 will confirm the reversal top and signal that selling pressure is building. A move to 145.900 will negate the potentially bearish chart pattern and signal a resumption of the uptrend.
On the upside, the closest resistance is a pivot at 143.127. On the downside, the closest support is a pivot at 140.855, followed by another at 138.156 and a retracement zone at 136.131-133.826.
Daily Swing Chart Technical Forecast
Trader reaction at 143.127 should determine USD/JPY’s direction on Friday.
A sustained move below 143.127 will indicate the presence of sellers. The removal of the pivot at 140.855, followed by 140.353 will indicate that the selling is strengthening. This could trigger an acceleration towards 138.156.
A sustained move above 143.127 will signal the presence of buyers. If that creates enough short-term momentum, look for a retest of 145.900.