USDJPY
PRICE, CHARTS AND ANALYSIS: - USDJPY Eyes 150.00 as the Threat of FX Intervention Grows Louder.
- BoJ Meeting Minutes Painted a Dovish Picture but Market Participants are Pricing in a 62% Chance of a Rate Hike in January 2024.
- IG Client Retail Sentiment Shows 80% of Traders are Net-Short USD/JPY.
YEN FUNDAMENTAL BACKDROP
The Bank of Japan (BoJ) minutes released today from the July meeting emphasized the need to explain changes to the Yield Curve Control (YCC) policy. Policymakers wanted to ensure that market participants don't see these tweaks as a signal of the end of accommodative monetary policy. Despite the BoJ not achieving sustainable wage growth above inflation, market participants are currently pricing in a slightly higher than 60% probability of a rate hike in January 2024.
The Yen has struggled against the Greenback but gained ground against the Euro and GBP due to concerns about a slowdown in the UK and EU. The threat of FX intervention supports the Yen, with comments from Japanese officials and BoJ policymakers helping to prevent a larger slide. The 150.00 psychological level is seen as important for the BoJ, and if USDJPY approaches or breaks above it, there is a greater chance of a pullback as bulls may take profit on long positions.
RISK EVENTS AHEAD
The upcoming week poses the highest risk to Yen pairs, with the US, UK, and EU being the main sources. Japan does not have any significant market-moving events, but comments about intervention could have an impact. Data releases are not expected to change the current narrative of higher rates for a longer period. Weak data from the EU and UK could weaken the Euro and GBP, while strong data from the US could strengthen the Dollar Index (DXY) and potentially require intervention from BoJ officials.
PRICE ACTION AND POTENTIAL SETUPS
USDJPY
has advanced this week as the US Dollar gains strength. The pair is approaching the significant level of 150.00, which is positive for USDJPY bulls. Despite overall USD strength, the rise in USDJPY has been steady and gradual, which aligns with the Bank of Japan's emphasis on stability. Key Levels to Keep an Eye On:
Support levels:
- 148.40
- 147.50
- 145.36
Resistance levels:
- 150.00 (Psychological level)
- 152.00 (2022 Highs)
Taking a quick look at the IG Client Sentiment Data whichshows retail traders are 80% net-short on USDJPY.
