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USDJPY 4 HOUR: Reacts to verbal intervention
Timing of verbal intervention suggests the MoF/BoJ have drawn a line in the sand around 159 to prevent 160 coming into play.
While 158 is pivotal in setting the intra-day tone, 157.76 (just tested) is key support that would need to be firmly broken to confirm a break in current (up) momentum.
USDJPY DAILY: Too soon for an intervention alert?
JPY underperforms: Trading with a bid while above 158, stronger while above 158.50 in a market likely to keep one eye looking over its shoulder for intervention but seems too early to sound an alarm.
In this regard, any approach to 160, should one occur, would raise the alert level but even then much would depend on the overall dollar tone.
USDJPY DAILY – Will the BoJ inmtervene?
The move back above 158 will raise talk whether the BoJ will intervene and if so at what level given its change in tactics to not telegraph in advance when it might take action. Given the overall firm dollar (and US bond yields), intervention would be counterproductive around current levels so Looking at the chart. the obvious level it does not want to see trade above is 160.39. In any case, 158 is now pivotal with a bid as long as it trades above it.
USDJPY 1 HOUR: Did the BoJ defend 158?
USDJPY moving through 157.52 = 61.8% has put 158 on the radar, a level the BoJ may look to covertly defend given the void of key levels until 160+ on the upside.BoJ conducted a “rate check” with market participants late Friday, signaling potential preparation for currency intervention, reports Nikkei
Market Update (4 hour)
EURUSD extending low and now dependent on 1.1450 holding to keep focus on 1.15 or door opens further on the downside. Note EURJPY selling (after rising sharply post-BoJ) after USDJPY tested 158 and retreated weighing on the EURUSD.
US500 pivoting 7650 after move above it stalled.
XBRUSD: Market can’t make up its mind although charts show momentum pointed down.
USDJPY 4 HOUR: CLEAR UNDERERFORMER
With the Fed setting the bar high for being hawkish, the JPY has sold off after the as expected BoJ rate hike in what was not a unanimous decision.
USDJPY moving through 157.52 = 61.8% has put 158 on the radar, a level the BoJ may look to covertly defend given the void of key levels until 160+ on the upside.
So 2 levels to watch, both potentially pivotal
157.50 on the downside
158.00 on the upside
Market Update (1 HOUR)
Feels like the calm before the next storm day (FOMC tomorrow) .
US 10-year 4.996% as it pivots 5.00%/- EURUSD: Inside day but upside again contained by 1.1550-52 (USDJPY underperformer, trading just above 155)
- US500: On the defensive but so far holding .7575 again (see chart) for a double bttom
- XBRUSD: Regaining a bid but facing an obstacle at 110+
USDJPY 4 HOUR: Will the BoJ intervene?
With short-term momentum turning up and USDJPY testing back above 155 for the first time in over a week, will the BoJ try to resist and intervene? Given a generally firm USD tone and rising US bond yields, the BoJ might try to slow the market but it is doubtful an ambush would be effective. In this last episode before the BoJ ambush, the upside stalled below the 61.8% level so keep an eye on FIBOS in the absence of key nearby levels as well as the pivotal 155 level.
CHFJPY WEEKLY: Funding currencies
One look at this chart would strongly sugggest switching from JPY to CHF as a favored funding currency (e.g. for carry trades) is driving the cross lower.
While this has developed into a clear downtrend, it is not technicals driving the flows.
This would also explain divergence today, USDJPY down, USDCHF up.
Bessent verbal intervention sent USDJPY lower but did not make a new low.
“I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do,” Bessent said. “And you can bet against me if you want.”
How Interest Rates Affect Financial Markets and Traders
Forex Market Snapshot
Markets continue to shrug off firming oil prices (but for how long?) where Brent touching $100 per barrel is grabbing headlines.
It may be a matter of a wait-and-see ahead of key events, an expected ECB rate hike Thursday and US inflation reports over the next two days.
In the meantime the dollar is trading a touch softer but so far with limited follow through after EURUSD paused around 1.1650 and USDJPY found support again just below 153.
USDJPY 1 HOUR: Bounce off the low
As noted yesterday, the break below 155 had left a void until 152.00-07 as the next target and USDJPY made a run at it before pausing at 152.88.
The subsequent bounce has created some up short-term momentum off higher lows (2 red AT lines) that would need to get through 154.38-63-80 to shift the focus back io 155.
Otherwise it is consolidation with upside contained while below the layer of resistance and key sell stops exhausted until/unless a new low is made.
Forex Market Snapshot
The dollar is tracing mixed, up vs all but the CAD and JPY, the latter up small after USDJPY bounced after extending its low to 152.88.
The mood otherwise is risk off as firm oil prices and-higher US bond yields (curve steepening) weigh on stocks amid rising geopolitical concerns.
No key US data is due today.
