USDJPY fell Marginally following an Intervention speech by Masato Kanda, Japan’s head foreign exchange official.
The USDJPY is trading down about a tenth of a percent in the 151.300s at the start of the new week. It has lost ground as intervention language from Japan’s currency chief, Masato Kanda. Fuels speculation that the Japanese government is poised to undertake market operations to prop up its currency.
Kanda believes the recent decline of the Yen is due to speculation rather than fundamentals.
Kanda, the vice-finance minister for international affairs, was responding to the weakness faced by the Yen. Which remains at historical lows. Following the Bank of Japan’s (BoJ) historic move. They raised interest rates for the first time since 2007. During their policy meeting last Tuesday. The move appeared to be highly unexpected, given that higher interest rates typically strengthen rather than weaken currencies.
“The current weakening of the yen is not consistent with fundamentals. And is clearly driven by speculation,” Kanda told reporters Monday. “We will take appropriate action against excessive fluctuations. Without ruling out any options,” he stated, according to a Japan Times story.
When asked if the authorities will engage in direct intervention, or Yen-buying in the open market, Kanda responded, “We are always prepared.”
USDJPY has reached a threshold, above 150.000, where the BoJ has traditionally intervened to prop it up, as previously This was the case in 2022, when the currency reached 151.950 versus the US dollar.
Data from the currency futures market appears to back up Kanda’s claim. Despite widespread reports that the Bank of Japan will raise interest rates, speculators, such as hedge funds, raised their bearish (short) bets on the yen throughout the week of the March meeting, according to Commodity Futures Trading Commission (CFTC) data.
Technically, the USDJPY created a bearish Hanging Man Japanese candlestick pattern (circled) on Thursday. Indicating an increased risk of a short-term reversal and decline.
US Dollar vs. Japanese Yen:
The pair has challenged the level of the 2023 and 2022 intervention highs at the same time.
The formation of the bearish pattern raises the likelihood of a subsequent decline.
Friday’s red candlestick confirms Thursday’s Hanging Man. And enhances the probability of further fall.
However, because Japanese candlesticks are only short term reversal patterns. The downward move may be temporary.
A continuation of the downturn may be projected to reach support at the 50-day Simple Moving Average (SMA) of 149.123.
Alternatively, a recovery and clear break above 152.000 would indicate. That bulls continue to hold the upper hand and the BoJ is unwilling or unable to interfere significantly to influence the exchange rate.
Such a move, however, would be unlikely to grow much higher given the forces stacked against it. With a potential objective at The next whole number is 153.000.
