USD/JPY 5 minute chart
If anything else, it shows that:
1) The earlier decline was likely not due to intervention control or otherwise on Tokyo’s part. I mean, the timing of the move was already suspect, as mentioned at the time. And that’s probably the revelation afterwards. It’s definitely easier to digest and make sense of the move two hours later, of course. So what could it have been?
2) The couple is definitely in a pretty abnormal state at the moment. Many traders stay away, fearing being crushed by Tokyo. So, larger flows would perhaps lead to exacerbated price movements – at least more than usual. This could have been it, with shutdowns triggered so quickly.
3) Dip buying shows the underlying appetite in the market at the moment. It is difficult to combat this dynamic, especially since the BoJ’s conviction has also been lacking of late. I mean, the recent inflation data didn’t turn out the way they hoped. And that puts the brakes on any further rate hikes this year. This is not to say that Japanese yen pairs are also supported by rising bond yields in recent weeks. Added to this is the lack of technical resistance on the rise of USD/JPY currently.
Anyway, we’re back where we were a few hours ago now. Buyers may not get too carried away just yet as we await US PCE price data. But barring any surprises, we could see price developments start to accelerate again afterwards. The 157.00 mark will be an interesting level to watch, as with all big round numbers from here on out.
And as mentioned before, it will be interesting to see if Tokyo has the appetite to act at the last minute today. Please note, Monday is a public holiday in Japan. But I still don’t rule out any action early in the morning if there is nothing before the weekend later.
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