JPY will Bank of Japan intervene again?

The Japanese Yen (JPY) continues to perplex the Japanese monetary authorities it traded through 81 USDJPY yesterday and continues to grow stronger. Will the Japanese Ministry of Finance and The Bank of Japan suffer the same fate as the SNB, the Swiss also intervened to try and weaken their currency against the EUR but only incurred heavy losses as EURCHF continues to weaken (bullish for CHF, bearish for EUR) . The Threat of intervention is stopping the Yen from strengthening too much for now.  However the trend clearly remains up for  the Yen, we've already seen an 80 print for USDJPY cross as it set  a new low for the decade. I expect a move down and through 80 for USDJPY before the trend reverses.

Below is a daily chart for  USDJPY which informs us of the losses so far sustained by the monetary authorities following their last round of intervention. When they bought USD and sold JPY when USD traded through 83 (USDJPY).  They were successful in pushing USD up to 85.930 and into the 50 day exponential moving average, which surprisingly acted as resistance, I say “surprisingly” because technical's along with trading software systems can usually be thrown out the window when a Central Bank intervenes in the currency markets! . But, since then the trend continues downward for the USDJPY , which means JPY strength . The Japanese Finance Minister, Mr. Noda, makes the decision regarding intervention. Remember, because this is an important piece of information if you are trading forex , the MOF makes all decisions regarding intervention and then directs  BOJ to take action. This is the same for the US, any decisions regarding the USD lie with the Treasury, who direct the Federal Reserve to take act on their behalf. The BOJ or the Federal Reserve cannot take action without permission from MOF or the Treasury.

Mr. Noda said that Japan is prepared to take “decisive steps” to curve “excessive” movements in the forex market. He also said that Japan is prepared to take these steps without the approval of the G7 or the G20. As I write this blog Mr Noda still has not taken such action, however the level of 80 USDJPY is one which I'm watching closely. The question is will any intervention occur before the G20 meeting in Seoul South Korea, according to Mr Noda's rhetoric, maybe.  If you would like to continue learning how to trade profitably and find out how we are managing our Forex positions  register here for a 14 day guest pass to the GT members area.