Oct 11, 2022
VOT Research Desk
Market Insights & Analysis
- Testing significant resistance is the USD/JPY.
- BoJ might intervene once more to support the Yen.
As it continues to fall against the US dollar, the Japanese yen is once again in the news. The pair is currently testing the 145.90 level, and if it breaks higher, it would reach levels not seen since August 1998 for USD/JPY.
On September 22, when USDJPY was trading around 145.70, the Bank of Japan bought approximately $21 billion worth of Yen to stabilize the currency. Before the market decided to test the BoJ once more and push the USD/JPY back higher, the Japanese central bank’s actions drove the pair back down to approximately 140.00.Since then, the Japanese yen has fallen against the strong US dollar.
Due to expectations that the Federal Reserve will continue to aggressively raise US rates, US Treasury yields, which are a driver of the strength of the US dollar, continue to rise. The yield on the UST 2-year note is currently 4.36 percent, which is the same level it was at in August 2007.
USD/JPY could easily test the August 1998 high of 147.63 if the Bank of Japan decides to withdraw from the market at these levels. If this level is broken, it will be difficult to find resistance on charts going back more than two decades because only the 150 “big figure” level will be visible.
This year, the Japanese yen has fallen by more than 25% against the dollar. The authorities in the United States will be eager to see this decline stop in order to prevent Japan from gaining an excessive trade advantage due to its weak currency. We may be getting close to the USD/JPY high.
According to data from retail traders, 20.64 percent of traders are net-long, with a ratio of 3.85 to 1. The number of traders net-short is 6.16 percent higher than yesterday and 10.81 percent higher than last week, while the number of traders net-long is 10.57 percent higher than last week.
The fact that traders are net-short suggests that USD/JPY prices may continue to rise, as we typically take a contrarian approach to crowd sentiment. Positioning is net-shorter than it was yesterday, but it is net-shorter than it was last week. We have a further mixed USD/JPY trading bias due to current sentiment and recent shifts.
Analytic Indicators
USD/JPY
|
Name |
Value |
Action |
|
RSI(14) |
66.548 |
Buy |
|
STOCH(9,6) |
81.068 |
Overbought |
|
STOCHRSI(14) |
100.000 |
Overbought |
|
MACD(12,26) |
1.490 |
Buy |
|
ADX(14) |
42.529 |
Buy |
|
Williams %R |
-3.159 |
Overbought |
|
Name |
Value |
Action |
|
CCI(14) |
163.9710 |
Buy |
|
ATR(14) |
0.9025 |
Less Volatility |
|
Highs/Lows(14) |
0.7029 |
Buy |
|
Ultimate Oscillator |
67.625 |
Buy |
|
ROC |
2.385 |
Buy |
|
Bull/Bear Power(13) |
1.6320 |
Buy |
|
Buy:8 |
Sell:0 |
Neutral:0 |
Indicators Summary: Strong Buy |
