It’s a tough situation for Japan as the yen continues to fall this week. The BOJ hasn’t offered much help as USD/JPY now hits the 156.00 level, its highest level in over three decades. So, what’s next for the couple?
USD/JPY daily chart
For now, buyers are cautiously raising prices. And as long as it is not a movement that will too far, too fastthis might not trigger any intervention from Tokyo Again.
The line in the sand is definitely moving and that’s something we’ll have to acknowledge. The question now is: will 160 be that new threshold? Or is it going to be sooner?
For today at least, I’d say there are only two things left to watch.
The first will be the press conference of BoJ Governor Ueda. Traders will be looking at this for clues on whether to continue pushing the agenda by pushing the USD/JPY limit.
I can’t imagine Ueda giving traders a clear green light to push USD/JPY higher. But he still has a difficult balancing act to do, especially since recent inflation data hasn’t been too encouraging to support a much more hawkish stance.
Given the circumstances, even a temporary yellow light would be enough for traders to continue bidding USD/JPY higher. So the challenge for Ueda is to manage this and not let price developments get out of control.
The other thing to watch today will be the final hours of trading in the United States. Generally, when central banks intervene, they do so at the most efficient and cost-effective time. And this usually happens during periods of reduced liquidity. Given the current situation, they may only have one window left to do so, just before the market closes for the weekend.
As such, this could also result in profit taking later in the day. So, be wary of that.
cnbctv18-forexlive
