Usdjpy Drops On Japan Intervention

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Usdjpy Drops On Japan Intervention

Usd/Jpy Drops Near 155.00 Support On Japan'S Intervention

The markets were in fear of a possible intervention from BoJ, and it looks like it has finally happened! The USD/JPY dropped during Monday's session near the 155.00 support & there's no other explanation other than an intervention.

The pair was seen trading near the 160.00, but all of that went up the smokes in an instant, losing almost 500 pips within a matter of a few minutes.

Usd/Jpy Flash Crashes Towards Support

According to experts, this was the BoJ intervention that everyone was talking about, but it didn't stop the USD/JPY from advancing higher. So, in a sense, it was the advance of the USD/JPY which led us to this outcome.

Despite the sharp decline seen in the USD/JPY, the currency diplomat from Japan has still not confirmed the FX intervention. However, he did comment on how abnormal, rapid, and speculative movements in the JPY have impacted the economy in a bad way.

As for what an appropriate level for the USD/JPY is, he decided not to provide any details. It feels like Japan's authorities are now using fear as a way to control the exchange rate of the USD/JPY. After all, no one knows what will be the possible point of intervention & thus could keep the USD/JPY underpinned.

After the BoJ's pivot from decades of negative rates, an upside was expected in the JPY. However, the opposite happened, as the JPY is now trading at historic lows against its peers.

If we look at the BoJ, it seems that the central bank has adopted a moderate approach when it comes to normalization. This means the divergence from the Fed and BoJ is here to stay for quite a long time.

Meanwhile, there's also uncertainty about the next actions of the Federal Reserve in terms of the proposed rate cuts. Wednesday's meeting is not yielding any rate cuts, and that's already priced in. However, the investors will be looking for any hints from the meeting minutes to gauge any change in the policy.

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