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USD/JPY has moved heavily through the 150.00 level that many saw as being a level the Bank of Japan were defending. It’s clear that no currency intervention will be happening by the Bank of Japan based on the 150.00 level, so where could we see USD/JPY rise to? This rise is largely driven by BoJ’s monetary policy decisions, including their yield curve control (YCC) which they just announced this week that they’ll be more flexible with.
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BoJ won’t intervene this early because it knows most speculators have short positions. The intervention will be unexpected this time around.
EUR/JPY is back to AUG’s 2008 highs.
I’m waiting for the FOMC to get out of the way to enter any xxx/JPY positions. Currently, the pause is 97% likely to happen = USD Decline. However, the press conference will be most important. What tone does Powell choose, and what he says.
Previously, he has stated, “Rates are not too high”. To be honest, he is right. The data confirms there is still space to hike (hotter than expected CPI, PPI, etc). However, by the end of the speech, he had also stated, “Yield rise could mean less need to hike” – leaving us with the DXY consolidation for the past few weeks.
So, the Press Conference should decide which direction the price will move. Unless Powell throws another curve ball and leaves us with 50/50.
Hawkish Powell –> Bullish DXY / Bearish Stock Market
Dovish Powell –> Bearish DXY / Bullish Stock Market
I wouldn’t be surprised if the tone would be dovish – counting on Friday’s NFP being hotter than expected. This would bring back any indecision into the market, which would slow down any trend moves. I can imagine that would be the best outcome for the FED.
I see a double top on the daily within the last 12 months.
Watching this reminded me I made some comment in one of my notes over the summer about some interesting levels if something catastrophic happened to the yen, and it seems like a good idea to revisit that. My thinking has evolved a little since I made this note, so not all of it seems as convincing to me now, but the closest level, 154.4, still looks interesting to me.