The global currency market went wild after USD/JPY suffered massive sell offs due to a joint intervention between the United States and Japan. For those of you tracking the charts, the Yen was getting beaten past the ¥163 per dollar level, but it immediately fought back and surged to ¥155.2 its strongest level since early May. Officials from both countries even gave a firm warning that they won't hesitate to step in again if the volatility gets too out of hand.
On top of that, Japan's manufacturing sector is going strong. The latest data shows japan Manufacturing PMI parked at 54.5, meaning factory activity has been expanding for seven straight months at its fastest pace in over 12 years.
Looking at the daily chart, the price rejection from the top (around 163.960) was insane. The price crashed straight down, breaking through the moving average line and testing a crucial support area. Trading volume spiked during that massive drop, while the stochastic indicator hit the oversold zone, hinting at a potential short term technical rebound before the market decides its next move.
From a fundamental standpoint, the Bank of Japan (BoJ) is also in the spotlight since their benchmark interest rate sits at 1.00%, accompanied by liquidity data like the central Bank Balance Sheet and Monetary base that institutional players keep a close eye on.
My Opinion
In my personal view, the current USD/JPY condition is really dangerous for traders who rely purely on technical analysis without paying attention to fundamentals. Central bank and government interventions are wild cards that can render even the best technical setup useless in a split second. So for those of you jumping into the market, it is super important to tighten your risk management and never skip macro news updates so you don't get pranked by extreme price action.
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Source
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