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USD/JPY: 50 pips pop off 112.00 suggests JP intervention

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 23, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    USD/JPY has jumped over 50 pips after briefly breaking the 112.00 level, in what appears to be intervention by the BOJ following the sharp 100 pips sell-off in the pair seen in the Asian session alone, in which risk aversion has been the dominant driving factor since the get go.

    Intervention as a message against excessive Yen appreciation?

    As a reminder to traders, the lower USD/JPY goes from here, the more aggressive rhetoric Japanese officials will utilize to talk down the Yen. Today's quick pop appears to be a warning against excessive speculative flows into the Yen, at a level that was had already seen Japanese intervention during the fall of February 11th and 12th.

    Japanese intervention to be sporadic?

    Traders holding shorts near by 112.00 or below should be extra cautious and avoid being caught on the wrong side of the trade if Japan continues its sporadic intervention in the FX market. That said, it its unlikely that Japan will conduct any large-scale intervention program as it has clearly stated that this would be against G20 principles. Traders should expect further intervention only off volatility is excessive, only then, Japanese authorities may find it justified to clean out some positions, hoping that this will deter the speculative flows into the Yen.
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