It’s a tricky spot for Japan because the yen continues to slide in buying and selling this week. The BOJ did not supply a lot assist as USD/JPY now runs as much as the 156.00 degree, its highest in over three a long time. So, what’s next for the pair?
USD/JPY day by day chart
For now, patrons are cautiously taking worth higher. And so long as that isn’t a transfer that’s going too far, too quick, it won’t set off any intervention performs from Tokyo but.
The line within the sand is unquestionably shifting and that’s one thing we’ll must acknowledge. The query now’s, will 160 be that new threshold? Or is it going be any earlier?
For at present a minimum of, I’d argue that there are solely two issues left to observe.
The first can be BOJ governor Ueda’s press convention. Traders can be trying to that for clues on whether or not to maintain urgent the agenda right here in pushing the boundary in USD/JPY.
I am unable to think about Ueda giving a transparent inexperienced mild to traders to rocket USD/JPY higher. But he has a tricky balancing act to do, particularly since current inflation knowledge hasn’t been too encouraging to help a a lot hawkish stance.
Considering the circumstances, even a tentative yellow mild could be sufficient for traders to maintain bidding USD/JPY higher. And so, the problem is for Ueda to handle that and never let worth motion get uncontrolled.
The different factor to be careful for at present can be within the later hours of US buying and selling. Typically when central banks intervene, they have an inclination to take action on the best and cost-effective time. And that often means during times of lowered liquidity. Given the place we’re at now, there would possibly solely be one window left for them to take action and that’s proper earlier than the market closes for the weekend.
As such, that might additionally invite some profit-taking later within the day. So, simply be cautious about that.