Today’s Asian session brought statements from several important officials in charge of Japan’s finances. Japanese officials spoke on oil, gas, border control and of course, commented on the weakening yen. Japanese Finance Minister Suzuki says he will respond appropriately to excessive movements in the currency market, he said, among other things:
- is closely watching the current movements in the foreign exchange market
- will respond appropriately to excessive movements in the foreign exchange market
- clarified Japan’s position on fx at the G20 meeting
- received full support from the US on the topic of BoJ intervention
Kanda commented even more bluntly on the weakening yen. Kanda is the chief official in charge of currencies at Japan’s Ministry of Finance. He is the one who will instruct the Bank of Japan to intervene when he deems it necessary.
His speech today indicates strong dissatisfaction with the low USDJPY exchange rate. His statement was short but specific: quote: “we are always ready to take the necessary steps against excessive volatility in the foreign exchange market, and I can make the decision to intervene in the foreign exchange market anywhere, even on an airplane.”
There are plenty of indications that we can expect another intervention to strengthen the yen in the near future. The previous one took place on September 21. Then the USDJPY exchange rate fell 550 pips in 45 minutes. The question remains: not if, but when?
USDJPY technical analysis
Today on the chart of the USDJPY, on the H4 interval, a bullish engulfing formation appeared. The maximum of the candle forming the formation is near the level of September 21st, when the BoJ intervened in the market by buying the yen.
Currently, the MACD oscillator has entered a downward phase starting a bearish divergence. According to the PA+MACD strategy, we can expect a continuation of declines after a downward breakout from this formation.
Considering the possible intervention of the BoJ, opening Sell positions gives a higher probability of winning than Buy positions.
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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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