USDJPY nearing 150 again! Overview
USDJPY is nearing the 150 handle again. The Bank of Japan (BOJ) may intervene, creating lucrative JPY buying opportunities.
The Details
The Yen is weakening. The JPY Currency Index ( TVC:JXY ) has the Yen at all-time lows. The last time the Yen was this weak was in September and October 2022; the BOJ intervened in the FX markets to strengthen the Yen—sharp moves of 500 pips formed in hours!
USDJPY is back at the 2022 intervention levels. On the 3rd of October 2023, it is suspected that the Bank of Japan (BOJ) intervened to strengthen the Yen, which formed the 'BOOM' move identified on my chart. The intervention caused a bearish move of 300 pips.
In the coming days, USDJPY may reach the 150 handle again. The BOJ has two options:
Further Intervention - The BOJ may continue with FX intervention. This could bring a bullish shock to the Yen, especially USDJPY, like in October 2022. Expect a move of 400 to 600 pips to the downside on USDJPY. Maybe more. Maybe less. This could be followed by further JPY buying.
Interest rates - The BOJ may move away from negative interest rates. A rate change is BIG news for the Yen. Possibly, the Nikkei also. This is significant because monetary policy shifts from negative to zero or even negative to positive rates. This change could end the JPY selling and mark highs on the USDJPY chart.
Either option, the JPY weakness, especially short-term, is ending.
Things to consider:
Beware of slippage. The initial move will likely be quick and sharp, causing significant slippage on JPY orders.
If you catch the wrong side of the move, you could blow your trading account if you are over-leveraged and over-exposed.
The swap rate on holding the Yen is terrible, especially USDJPY. So, USDJPY Put Options or trading the JPY currency index may be better than spot FX.
Excessive and volatile moves against the Yen could be the catalyst that brings intervention rather than USDJPY reaching critical levels.
USDJPY may reach the 155 handle before the BOJ take action. My area of focus is 150 to 155.
