• USD/JPY retreats sharply from a fresh 24-year peak after Japan intervenes in the FX market.
  • The intraday USD corrective pullback from a two-decade high contributes to the steep decline.
  • Rising US bond yields, the Fed-BoJ policy divergence limits any further losses, at least for now.

The USD/JPY pair witnessed a dramatic intraday turnaround on Thursday and plunges over 550 pips from the vicinity of the 146.00 mark, or a fresh 24-year high touched this Thursday. The pair maintains its heavily offered tone through the early European session and hits a nearly three-week low in the last hour, though rebounds thereafter.

Japanese authorities intervened in the forex market for the first time since 1998 to stem the rapid decline in the domestic currency and trigger a massive sell-off around the USD/JPY pair. The strong intraday rally in the Japanese yen gives the US dollar bulls the chance to take some profits off the table, especially after the recent strong run-up to a two-decade high. This was seen as another factor that aggravated the bearish pressure surrounding the major.

That said, a recovery in the risk sentiment, as depicted by a generally positive tone around the equity markets, should keep a lid on any further gains for the safe-haven JPY. Apart from this, a fresh leg up in the US Treasury bond yields, bolstered by a more hawkish stance adopted by the Federal Reserve, supports prospects for the emergence of some USD dip-buying. This, in turn, assists the USD/JPY pair to rebound over 100 pips from the daily low.

It is worth recalling that the Fed raised interest rates by another 75 bps on Wednesday and signalled more large rate increases at its upcoming policy meetings. In contrast, the BoJ left its policy settings unchanged and reiterated that it will continue powerful monetary easing. This marks a big divergence in the Fed-BoJ policy outlooks, which has been a key factor behind the yen's slump of over 25% against its American counterpart since the beginning of 2022.

Technical levels to watch

USD/JPY

Overview
Today last price 140.72
Today Daily Change -3.33
Today Daily Change % -2.31
Today daily open 144.05
 
Trends
Daily SMA20 141.63
Daily SMA50 137.98
Daily SMA100 135.2
Daily SMA200 126.92
 
Levels
Previous Daily High 144.7
Previous Daily Low 143.34
Previous Weekly High 144.96
Previous Weekly Low 141.66
Previous Monthly High 139.08
Previous Monthly Low 130.4
Daily Fibonacci 38.2% 144.18
Daily Fibonacci 61.8% 143.86
Daily Pivot Point S1 143.36
Daily Pivot Point S2 142.67
Daily Pivot Point S3 142
Daily Pivot Point R1 144.72
Daily Pivot Point R2 145.39
Daily Pivot Point R3 146.08

 

 

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