- There is speculation that Japanese authorities may have intervened to support the yen.
- The dollar remained strong in the overall currency market.
- There was an unexpected rise in US job openings in August.
The USD/JPY forecast for Wednesday is bearish, as the yen experienced a sudden and short-lived spike that triggered rumors of a possible intervention by the Bank of Japan to support the currency.
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During Asian trade, the Japanese currency slightly decreased after spiking by nearly 2% on Tuesday to reach 147.30. This sudden increase occurred after the yen had slipped to 150.165 per dollar, its weakest point since October 2022.
James Malcolm, UBS’s head of FX strategy, stated, “Their intervention in this situation aligns perfectly with recent warnings from top officials and their historical actions.” Additionally, he noted that while authorities may not be able to reverse trends in the FX markets immediately, significant intervention sends a strong signal. Moreover, it allows time for other factors to align, eventually contributing to position adjustments.
On Wednesday, Japanese Finance Minister Shunichi Suzuki emphasized that authorities would take appropriate measures to counter excessive movements in the yen. Meanwhile, Masato Kanda, Japan’s top currency diplomat, refrained from commenting on whether Tokyo had intervened. Still, he noted that any actions taken had the understanding of US authorities.
US Treasury Secretary Janet Yellen had previously mentioned that the US response to Japan’s yen-buying intervention would depend on the specific details of the situation.
Meanwhile, after positive data on Tuesday, the dollar remained strong in the overall currency market. This data revealed an unexpected rise in US job openings in August. The rise came amid a significant increase in demand for professional and business service workers.
USD/JPY key events today
Markets are awaiting data from the US on:
- Private US employment change.
- S&P Global services PMI.
- ISM non-manufacturing PMI
USD/JPY technical forecast: Key resistance at 150.00 triggers a sharp decline.
Sentiment on the 4-hour chart has shifted from bullish to bearish. The USD/JPY pair dropped sharply after it touched the 150.00 key resistance level. This sharp move saw the price break below the 30-SMA, with the RSI dipping below 50 to support bearish momentum.
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Bears are currently in control of the market. Moreover, the price currently trades with the nearest resistance at 149.50 and the nearest support at 148.51. With the new bearish bias, we could soon see the price break below the 148.51 support level.
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