The latest strategy from Japan is to intervene when there are factors working in their favour in nudging USD/JPY lower. They did it last week after key US data releases and there is a suggestion that they are back at it again today. The drop lower in the pair isn’t quite a sharp one (that’s my only skepticism to this) but the selling pressure has been quite forceful in the last two hours.
And if Japan was looking for added support in giving a slight intervention nudge today, there are a few reasons.
The first being a key break of the trendline support for USD/JPY this year. That might have triggered stops amid a quick flush lower in the pair earlier, when price fell to around 157.00.
Then, there’s also the fact that we are seeing equities have an off day with risk sentiment turning sour. It’s not just the yen that has flourished so far today, even USD/CHF is down 0.7% to 0.8875 currently.
But perhaps a tell in there being heavy USD/JPY selling is that the dollar has struggled despite the more negative risk environment today. In fact, the greenback is the weakest performer across the board with even the commodity currencies sitting higher against the dollar.
Still, this points to some suspicion that Japan might have gave things a little nudge on the back. But from the price action, it’s not as clear as it was on Thursday and Friday last week.
This article was written by Justin Low at www.forexlive.com.
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