USD/JPY hangs on to bullish near-term bias after suspected intervention

The drop earlier had all the hallmarks of a BOJ/MOF intervention but so far, USD/JPY buyers are not throwing in the towel just yet. The low hit 155.05 and that called into question some key near-term levels. And for now, both the 100 (red line) and 200-hour (blue line) moving averages are being held:

It points to the near-term bias still being more bullish but I would caution that the price action dynamics have certainly changed. Apart from the technicals, the psychological aspect is also very much a factor now especially after the suspected intervention from Tokyo.

In my view, I don’t see anything or anyone else being able to move price to such an extent. Local media in Japan is not confirming nor denying it either. The Nikkei says that:

“The yen’s exchange rate against the dollar sharply rebounded from around 1:00 pm Japan time, and the price was volatile, with the dollar at one point hitting the 155 yen level. With the holiday and fewer trading participants, there is a deep-rooted sense of caution about yen-buying foreign exchange intervention, making the market prone to large swings.”

In any case, the best we can do is to look at things from the charts and try to make sense of price action alongside other factors in play at the moment.

And for now, it shows that USD/JPY buyers are not out of the game just yet. It would be argued that only a break below 155.00 will convince of a change in the momentum.

So, what’s next?

As much as Japan would like to hammer down the price, intervention is only doubly effective when accompanied by a shift in the fundamentals. That doesn’t appear to be the case though, for now at least.

This article was written by Justin Low at www.forexlive.com.