- USD/JPY is in an uptrend in the long, medium and short term.
- The pair is reaching the “intervention zone” where the Japanese authorities intervened previously.
- As such, there is an increasing risk that an intervention will occur again and a correction will develop.
USD/JPY is currently trading at 158.50 as it continues to rise in an ascending channel. It is now quite close to 160.32, the April 26 high, its highest level since 1986.
USD/JPY Weekly Chart
USD/JPY is now close to the “intervention zone” (red shaded band) around where Japanese authorities intervened to support the Yen on April 29 and May 2, according to BoJ data. This can be seen as the long red candle that represents the last week of April.
On Thursday, Japan’s top foreign exchange diplomat, Masato Kanda, warned“The government will respond to excessive currency movements,” adding that, “There is no limit to intervention resources in the currency market.”
From a purely technical point of view, the trend is bullish on all time frames and given the saying that “the trend is your friend”, it is more likely to continue rising.
However, USD/JPY is a special case due to the high risk of market manipulation by Japanese authorities. As such, traders should be cautious before assuming that the pair will simply continue to rise as the trend extends.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
