Bulls Strike Back: Will USD/JPY Keep Sliding?

Summary:

Japan's finance minister expects Japan and the United States to take joint action in the foreign exchange market to prevent the yen from falling to a 40-year low.

BUY USDJPY

EXP

TRADING

156.802

Entry Price

165.000

153.000

157.027 -0.388 -0.25%

0.0

Pips

Flat

153.000

Exit Price

156.802

Entry Price

165.000

Fundamentals

Market participants believe that the Japanese government bought yen and sold dollars during Thursday’s New York trading session; data from the Bank of Japan indicates that the scale of this intervention may have reached as high as $58.97 billion. Subsequently, the Bank of Japan kept interest rates unchanged but signaled the possibility of further rate hikes in the near future. Following Governor Kazuo Ueda’s press conference, the yen strengthened rapidly once again, leading to widespread market speculation that Tokyo had intervened in the market once more. Although Japan’s chief currency diplomat, Atsushi Mimura, declined to comment directly on the intervention, he stated that the support provided by the United States “went beyond psychological support” and noted that coordination with the monetary policy department on exchange rate issues would be strengthened in the future, indicating that the Ministry of Finance and the Bank of Japan are working together to stabilize the foreign exchange market.

The U.S. Treasury Department has notified several banks through the Federal Reserve Bank of New York that it may intervene in the yen market on Friday and has asked relevant institutions to prepare for future actions. This notice was issued the day after Japanese authorities stepped in to prop up the yen, leading the market to expect the yen to post its largest weekly gain since February and successfully break away from its 40-year low against the U.S. dollar.

Technical Analysis

On the daily chart, the Bollinger Bands are widening downward, and the moving averages are diverging downward, indicating that the downtrend remains intact. However, the candlestick pattern formed a “golden needle bottom,” suggesting the possibility of a rebound cannot be ruled out. The RSI stands at 22, indicating that market participants are predominantly selling. On the four-hour chart, the Bollinger Bands are widening downward, moving averages are diverging downward, and the MACD fast and slow lines are trading below the zero line, suggesting that the bearish trend remains intact. With the RSI at 28, the market has entered oversold territory, making a rebound highly likely. Strategically, look to go long on dips.

Bulls Strike Back: Will USD/JPY Keep Sliding?_1

Bulls Strike Back: Will USD/JPY Keep Sliding?_2

Trading Recommendation

Trading Direction: Buy

Entry Price: 156.5

Target Price: 165

Stop-Loss Price: 153

Support Levels: 156, 155, 153

Resistance Levels: 160, 162, 165

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Bulls Strike Back: Will USD/JPY Keep Sliding?

Risk Disclosure