The Japanese Yen (JPY) continues to remain sensitive after the Bank of Japan intervened to stop government bond yields from rising above its key target. The BOJ bought bonds at a quarter percent on Monday after the yield on the benchmark 10-year Japanese government bond rose to 0.245 percent earlier Monday. The Japanese yen weakened to around a seven-year low of 125 against the US dollar.
The USDJPY price is also rising because of the strong dollar, the greenback hovers near its highest level in nearly two years on Monday. The currency pair could extend further gains amid improved market sentiment. Recently, Ukrainian President Volodymyr Zelensky told Russian journalists Ukraine was prepared to discuss adopting a neutral status as part of a peace deal with Russia
The US Dollar (USD) is the world’s most traded currency, whilst the Japanese yen is the third most traded currency in foreign exchange markets after the U.S. dollar and euro. The US NFP data is the key release this week for the USDJPY. However, traders will also be watching the latest US GDP and personal income data which is set to be released on Thursday.
The Bank of Japan (BOJ) usually intervene in foreign exchange markets to maintain a stable value of the yen. Japan should intervene in the currency market or raise rates to defend the yen if it weakens beyond 130 to the dollar, the country's former top currency diplomat Eisuke Sakakibara said. “Current weak Yen positive for Japan’s economy, further weakening beyond 130 Yen would cause problems” - Sakakibara said.
USDJPY short-term and long-term review
USDJPY reversed from the daily highs. At the time of writing, the USDJPY trades below 123.40. In the short-term, the first resistance is located for USDJPY remains above 125, a break above this level will confirm a possible move to 125.85/126.30. On the downside, any meaningful pullback now seems to find some support near the 123 zones, below which the slide could further get extended towards the 122.40/121.20 and 120.00 regions.
In the long term, watch for monthly closing above 125.85 or below 116.40 area, which will give a larger confirmation of direction in the long term.
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