Intervention in the yen has had little effect; continue to bet on a weak yen.

Winkelmann

Forex

Central Bank

Summary:

The recent upward trend of USD/JPY has shown signs of fatigue, and official intervention may cause the yen to rebound.

BUY USDJPY

Close Time

CLOSED

160.048

Entry Price

163.250

157.700

154.420 +0.917 +0.60%

234.8

Pips

Loss

157.700

157.698

Exit Price

160.048

Entry Price

163.250

Fundamentals

On Thursday, the dollar fell 2.4% against the yen, hitting a low of 157.96 yen, its lowest level since May 14. The market widely believes this was an official intervention by Japanese authorities to support the long-weak yen. Meanwhile, the dollar also weakened due to lower-than-expected GDP growth and a slowdown in PCE.

However, the situation in the Middle East has led to rising inflation and expectations, prompting major central banks worldwide to favor hawkish interest rate policies. Meanwhile, the Bank of Japan's policy normalization process has been slow, and its persistent interest rate disadvantage has put continued pressure on the yen. Furthermore, the yen's exchange rate has already exceeded the previous intervention range, rendering verbal intervention largely ineffective. Investors are hoping to see concrete and decisive action, whether direct intervention or interest rate hikes.

Disappointingly, the measures taken by the Bank of Japan and the government have not been as hawkish as expected, mainly because the rise in inflation is not stable, the situation in the Middle East remains highly uncertain, and the yen will remain weak for a long time.

Technical aspects

Intervention in the yen has had little effect; continue to bet on a weak yen_1

Looking at the daily chart, USD/JPY has continued to rise, once breaking through 164.0, which has long exceeded the range of intervention by the Japanese authorities. The momentum of the yen bears does not seem to have weakened. Although there are occasional actual interventions that trigger sharp drops in USD/JPY, the impact is short-lived, and the exchange rate will soon rise again. In the short term, there is still no key force to change the trend of USD/JPY. Until then, the outlook remains bullish.

In terms of trading strategy, you can try going long when the price retraces to around 160.0, with a target of around 164.0 and a stop loss below 158.0.

Trading advice

Trading direction: Long

Entry price: 160.05

Target price: 163.25

Stop-loss level: 157.70

Downside support levels: 158.0/160.0

Upward resistance levels: 162.6/163.8

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