Recent daily charts for the USD/JPY currency pair show that the yen has made significant progress, aided by a weakening dollar and what appears to be intervention by Japanese currency officials. The market was caught off guard by actions taken by Japanese authorities.
Following news of U.S. inflation coming in lower than expected, Japan seems to have initiated large-scale purchases of the yen. This marks a stark contrast to previous interventions, which typically occurred in response to negative news, such as U.S. inflation or economic growth exceeding expectations.
The daily chart indicates that a short-term bearish reversal has materialized. Since then, the USD/JPY pair has been on a downward trajectory, breaking through critical support levels at 160.00 and 155.00 along the way.
Looking ahead, if inflation unexpectedly declines, this week’s U.S. Personal Consumption Expenditures (PCE) data could further extend this trend. However, if the data meets expectations, the trend may continue at a slower pace. The next support levels to watch are at 151.90 and 150.
In summary, the yen’s recent gains against the dollar highlight the impact of economic data and potential intervention strategies. Keep an eye on upcoming economic releases as they could significantly influence the USD/JPY pair’s direction!
Written by: ForexInflux.com
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