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Japanese Yen Outlook: Beware of Currency Intervention Levels

Japanese Yen Price Analysis & News

USD/JPY Nearing Currency Intervention Levels

An impressive week for the Japanese Yen having broken out of its 105-107 range on the downside. The path of least resistance remains lower for USD/JPY as it breaks below 104.50. That said, we are now approaching jawboning levels with 104.17 the July low prior to commentary from Japanese authorities that the MOF, FSA and BoJ were working together to examine market moves. Therefore, as the pair edges towards the low 104s, risks of another round of currency jawboning have been heightened. Elsewhere, the recent JPY appreciation looks to slightly overcooked when comparing against US 10yr yields.

USD/JPY vs US 10 year yields

Japanese Yen Outlook: Beware of Currency Intervention Levels

However, one factor to keep in mind is that with market holiday’s in Japan at the beginning of next week (22nd and 23rd) local demand in USD/JPY will likely be absent. As such, should support at 104.15-20 give way risks are for a move towards 103.80. On the topside, resistance is situated at 104.80 and 105.50.

USD/JPY Price Chart: Daily Time Frame

Change in Longs Shorts OI
Daily8%-2%4%
Weekly59%-7%29%

Japanese Yen Outlook: Beware of Currency Intervention Levels

Source: IG

CHF/JPY Reversal Underway

Last month we looked at a potential reversal in the works for CHF/JPY and true to form, trendline resistance remained the stumbling block for the cross. Psychological support at 115.00 provides a room for comfort for now, however, the weekly close will be key to watch as a close south of 115.00, raises downside risks for 114.00 handle. However, while I am less bullish on JPY vs USD at current levels, the same does not apply to JPY vs CHF given that positioning is also very long in the Swiss France with open-interest adjusted net longs at 22%.

CHF/JPY Price Chart: Weekly Time Frame

Japanese Yen Outlook: Beware of Currency Intervention Levels

Source: Refinitiv