Jpy Stays Weak Despite Intervention Fear

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Jpy Stays Weak Despite Intervention Fear

Japanese Yen (Jpy) Stays Weak Despite Intervention Threats

Once again, the Japanese Yen (JPY) lost its ground against the greenback on Wednesday, which is nothing new at all. As of right now, the USD/JPY is sitting at 161.91, a new high for the pair in the last few decades.

According to a senior analyst, a level of 161.91 was only last seen in 1986, which shows that the Japanese Yen (JPY) has really lost a lot of value in the last few years.

Japan'S 10-Year Bond Yields At 13-Year High

The recent upside in the USD/JPY comes after the recent data, which showed a contraction in Japanese business activity. Although the USD/JPY has reached new highs, it has also increased the chances of a possible intervention from the Bank of Japan.

So, if the BoJ does end up getting involved in the FX market to support the JPY, it could lead to a decline of 100-200 pips. In the past, similar moves have happened, causing the USD/JPY to flash crash in a matter of a few minutes.

While the JPY continues to lose, the 10-year bond yields of Japan are sitting at 1.11%, a 13-year high! The weakness in the JPY is also contributing to increased import costs, which is increasing inflation. According to media sources, the Finance minister of Japan is now thinking about floating rate bonds in order to protect the investors.

For now, the USD/JPY is trading near 161.60, with the next bullish target at 162.00, while the nearest support is present at 161.45 - 161.50. The daily chart of USD/JPY reveals that bulls remain in control as the pair is trading near the upper limit of the bullish price channel.

However, the RSI (14) has crossed the 70 mark which is a sign of overbought condition. But if we look at the past, the prices can continue to rise even after the RSI reaches extreme levels. So, it is better to say that RSI value above 70 is more of a sign of extreme bullish pressure rather than an overbought market that's about to reverse.

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