USD/JPY drop: Trend reversal or short-lived drop?
|USD/JPY experienced a strong sell-off yesterday following softer-than-expected US inflation figures, which dropped to 3%. The move was much more aggressive and sharp compared to other FX pairs, leading to speculation that Japan may have intervened in the FX markets. Japanese authorities have not confirmed any specific intervention but have stated they are ready to take necessary actions to strengthen the Japanese Yen.
Looking at the price action, there was a significant sell-off from 161.60, which could indicate wave 3 of a new bearish reversal. However, if this was indeed an intervention, the effects could be short-lived. It's crucial to wait for a completed 5-wave drop from the highs to confidently say that the USD/JPY trend is shifting from bullish to bearish. If the pair suddenly breaks above 160.27, the rise could continue to 163.
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