Usdjpy Drops As Yen Gains Strength

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Usdjpy Drops As Yen Gains Strength

USD/JPY Drops To 147.00 As Yen Gains Strength

USD/JPY was exhibiting strong bullish momentum that quickly faded away as the pair lost 250+ pips in a matter of few minutes. After the release of positive data from the USA, the pair crossed the 150.00 level only to experience a sharp drop.

After the drop, the USD/JPY pair touched a low of 147.28 only to recover a little bit and is now above the 149.00 threshold. This recent and sudden drop in the USD/JPY indicates that there's a good chance of FX intervention by the BoJ. After all, there was no reason for the USD/JPY to drop 250+ pips in a matter of few minutes.

Possible Intervention By BoJ

Similar types of movements were observed in pretty much all the other Yen crosses as well, which further adds credibility to the possibility of intervention by the Bank of Japan. Before this sudden collapse, many economists and officials from Japan were also hinting at possible intervention if the bullish momentum in USD/JPY continued.

Despite all the telltale signs of a possible intervention, there's no official statement made by the BoJ and Japanese officials. Perhaps we will have to wait a few days for the official statement, or it might never arrive.

The data from the US side that pushed the USD/JPY higher before the collapse was the JOLTS Job opening. The data for August showed a reading of 9.61 mn, which was higher than the 8.8 mn forecast.

After the report, the 10-year US bond yield turned up and touched the 4.74% threshold, which is one of the highest levels in more than a decade. The positive JOLTS job data, along with a surge in the bond yields, pushed the USD/JPY higher.

However, the bullish momentum couldn't be maintained as the BoJ possibly stepped in to support the Japanese Yen. The intervention was carried out in all the Yen pairs, which helped the local currency to strengthen against the EUR, GBP, & AUD.

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