JPY - Japanese authorities suspected of intervention, the Japanese yen rebounded significantly

The U.S. dollar fell against a number of major currencies on Monday. Among them, the fluctuations against the yen attracted the most attention. The U.S. dollar against the yen firstly hit the 160 on Monday, but then fell sharply to 155. Japanese banks sold the U.S. dollar aggressively, marking the first time in 18 months. Come see you for the first time. When asked whether the authorities had intervened, Finance Minister Masato Kanda did not comment. But traders said they intervened. Markets have been concerned that Japanese authorities may intervene to support the yen after it fell more than 10% against the dollar this year. The Bank of Japan kept interest rates unchanged at the end of its policy meeting on Friday but signaled future rate hikes. The central bank's review committee unanimously agreed to maintain the short-term interest rate target in the range of 0-0.1%, which was the rate setting when the central bank historically exited its large-scale stimulus plan a month ago.

To support the yen, the authorities need to sell Japan's U.S. dollar foreign exchange reserves and buy yen. In this process, the Minister of Finance issues an intervention order, and the Bank of Japan acts as an agent of the Ministry of Finance to execute the order. Japan intervened in the foreign exchange market three times in 2022, selling dollars and buying yen in September and October, when the yen fell to a 32-year low of 152 against the dollar. Now, it is estimated that if the dollar against the yen rises to 160 yen again, the Japanese Ministry of Finance may take more follow-up actions, which may be becoming the new bottom line for the authorities.

Since the U.S. dollar rose above 152 against the yen more than two weeks ago, the market has been highly vigilant against such actions by the Bank of Japan. As of last week, when the 155 mark fell below 152, there was still no sign of intervention. As of this Monday, it reached the 160 mark. It was finally put to the test, and the result was a subsequent setback, which was suspected to be the intervention of the Japanese authorities. Therefore, the 160 mark will still be an important resistance reference at present. It should also be noted that the US dollar against the yen reached a high of 160.35 in April 1990. If it breaks again, the extension target is expected to point to the 163 and 165 marks. The nearest support below is looking back at 155 and 154.50, and the larger support is expected to be at the 25-day moving average of 153.50 and 151.50.

Forecast range:
Resistance 160.00/35 – 163.00 – 165.00
Support 155.00 – 154.50 – 153.50 – 151.50

Highlights of the week:
29/4
Makoto Kanda, Financial Officer of Japan’s Ministry of Finance: “Speculative” yen trends cannot be ignored
Makoto Kanda, Financial Officer of Japan’s Ministry of Finance: No comment on whether there will be any foreign exchange intervention

Focus:
Thursday: Bank of Japan meeting minutes (07:50)

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