USD/JPY: Intervention on its Way, but How? Market Eyes 103.80
USD/JPY shot up earlier in a freak move with little substance behind it in thin trade. 107 was popped but only momentarily.
This is supposed to be a quiet week for the pair given that Japan are on holidays, but there is always the possibility of intervention to the recent and sudden strength in the Yen, but it is unlikely that the BoJ would only look for a measure of a couple of Yen. Intervention would need to create a prolonged weakening of the Yen and this would need to happen on a continuous basis to cheive a sustainable reversal. You can't change the direction of the market for any sustained period of time on just a coordinated one of spot manipulation - pointless to attempt it.
Analysts at UOB Group explained, that notably, BoJ's Kuroda reiterated that the current rise in JPY could have an adverse impact on the Japanese economy and is closely watching market developments and would not hesitate to act if needed to reach 2% inflation target. "The next key data release comes on Friday in the form of Nikkei services and composite PMIs for April."
USD/JPY challenged the 100 sma on the hourly sticks at 107.33, but there is little bid about the pair about the pair until 108.87 at the 20 dma really. If we get through there the next and major resistance is located at 111.73/90. "To see any real upside scope emerge we need recovery through this secondary level," argued analysts at Commerzbank. To the downside, closes through recent lows at 105.54 and a clear break below the 200 month sma and 105.15, Oct 2014 lows, the pair targets the 50 month sma at 103.75/80 level.