Merely for a point of reference, it's uncomfortable how much of the crowd seems to remain bullish in USD/JPY. This is anecdotal, of course, and observational so somewhat subjective, but putting all the pieces together seem to make the risk-reward potential in USD/JPY look askew to the upside.
Weekly technical outlook – USD/JPY, EUR/USD, GOLD [Video]
Despite the sharp pullback across USD/JPY and the US Dollar Index (DXY), the broader bullish structure remains intact. The latest correction appears to have been driven primarily by profit-taking, renewed Bank of Japan intervention concerns, and positioning adjustments following USD/JPY's test of major long-term resistance, rather than a meaningful deterioration in the US dollar's macroeconomic outlook.
The USD/JPY is experiencing heightened volatility following Thursday's intervention and the BoJ's hawkish hold on Friday.
Today's sharp fall in USD/JPY has shifted attention from the Bank of Japan meeting itself to a more immediate question: did Japanese authorities take advantage of the perfect market conditions to intervene?
TL;DR:Will the Fed and BoJ jointly surprise markets this week? USD/JPY, already at a 40-year high above 163, faces amplified two-way risk from their combined policy signals.
The US dollar remains firm near 101, USD/JPY is testing new yearly highs above 163, and Treasury yields have returned toward their yearly highs. Together, these factors continue to outweigh the latest rebound in precious metals, which still requires further technical confirmation before supporting a sustainable long-term bullish outlook.
On 3 July, Japan's Finance Minister, Satsuki Katayama, stated that the Ministry of Finance remains in close contact with US authorities regarding developments in USD/JPY as the yen traded near its weakest level in almost 40 years. Similar verbal warnings have become increasingly common whenever the pair approaches the 162.00 area, although no direct intervention has been announced so far.
Japan may not have spent a dollar today, but it may have achieved one of the key goals of intervention anyway. USD/JPY plunged from 162.59 to below 161.30, a move large enough to trigger immediate speculation that Tokyo had stepped into the market.
USD/JPY falls sharply while on intervention watch & ahead of the NFP report. Oil continues to fall as supply rebounds & OPEC.
In this webinar we take an in-depth look at the technical trade levels for the US Dollar (DXY), Euro (EUR/USD), British Pound (GBP/USD), Australian Dollar (AUD/USD), Canadian Dollar (USD/CAD), Japanese Yen (USD/JPY), Swiss Franc (USD/CHF), Gold (XAU/USD), Crude Oil (WTI), S&P 500 (SPX500), Nasdaq (NDX), and Dow Jones (DJI). These are the levels that matter on the technical charts into the weekly open.
The USD/JPY exchange rate continued its strong rally last week, reaching its highest point since 1986. It peaked at 161.81, up by 15% from its lowest level in May last year, putting investors on edge as they wait for the next actions by the Bank of Japan (BoJ).