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The US dollar has held firm against the Japanese yen currency as the USDJPY pair runs above the 145.00 or close to it, bringing the potential for intervention.
So far, the Bank of Japan have been on the wires talking up the prospect of central bank intervention as the USDJPY pair reaches excessive and uncomfortable levels for the BoJ.
The Finance Minister Suzuki has been out this week raising the threat of intervention, noted that “Sharp, one-sided moves seen in FX market”, raising alarms of action.
This is sort of comment is of the type that is key to indicating the potential for actual intervention, and to be fair we are now at the same type of levels when the BoJ acted in the FX market this year.
Suzuki also added that “FX should move stably reflecting fundamentals” and “Yen weakness has both merit and demerit”. More telling he added that “Current situation not positive to current policy issues.”
The key thing to watch this week is that the trend remains short-term bullish while the price trades above the 142.00 level. However, a move under 142.00 could set up a test of the 139.00.
According to the ActivTrader Market Sentiment tool, some 67% of traders are bullish towards the USDJPY pair and the other 33% are bearish, which strongly hints that we could see more downside.
With retail traders or participants are very bullish thus the chances of a price correction to 142.00 or even to 139.00 are dramatically increased.
USDJPY Short-Term Technical Analysis
Technical analysis on the four-hour time frame shows that the USDJPY pair continues to hold below the Ichimoku Cloud and is short-term bearish below its lagging and base line.
According to a triangle pattern, the USDJPY pair has bearish MACD price divergence extending down towards the 142.00 level, and resistance sits at 146.00.
USDJPY Medium-Term Technical Analysis
The daily time frame is showing that the USDJPY pair has formed a powerful bullish trend, making it likely an intervention will quickly find buying after..
According to Ichimoku analysis the price is working its way towards higher. Better to wait for a trend change of the price moves under baseline support around 142.00.
