Yen Under Pressure

USDJPY is back within 50 pips of the YTD USDJPY is back within 50 pips of the 40 years around 162.85 with the pair having rebounded sharply off last Thursday’s drop. There is plenty of speculation going around regarding potential intervention form Japanese authorities. However, despite plenty of hawkish JPY rhetoric recent, we’re yet to see anything that looks like intervention with last week’s sell off attributed to speculative shorts and long covering in thin markets ahead of the NFP and the long weekend in the US. However, Japanese officials have continued to reaffirm their readiness to act against excessive currency moves but with JPY under heavy selling pressure again, the question is at which point will we see this action and furthermore, if it can prove to be more impactful than just a short term spike in JPY for bears to reload.

FOMC Mins

Looking ahead today, there are risk of further weakness in JPY with the FOMC minutes likely to create fresh USD support. The June FOMC saw a firmly hawkish shift in the Fed and tonight’s minutes are likely to include hawkish details which could rive fresh USD buying through the back of the week, creating bearish risks for JPY. If we do see USDJPY breakout to fresh highs, risks of Japanese intervention will be at fever pitch with plenty of volatility warnings consequently.

Technical Views

USDJPY

The rally in USJDPY is seeing the pair trading back up to highs with price now just shy of the 162.85 high-watermark. While above 161.95, focus is on a continuation higher here with 164 the next bull target. If we turn lower again, 160.4 and the bull channel lows will be the support area up watch.