Forex Market: USD/JPY recovers ground above 149 mark after another suspected BoJ intervention

The Japanese Yen received only a brief support against the US Dollar on Monday as a result of a suspected Bank of Japan intervention in the market.

The USD/JPY pair reached an intraday high at 149.70 during the early phase of the Asian trading session, after which it plunged to 145.28 in a matter of minutes, an occurrence that suggested the Bank of Japan, acting for Japan’s Ministry of Finance, had intervened for a second consecutive day.

Later, however, the major Forex pair found its way back up at levels above 149.00, as the US Dollar remained strong.

“The price action should be worrying for the MOF, as it suggests that there is strong demand to buy into dollar/yen dips,” Sean Wallow, a senior currency strategist at Westpac, was quoted as saying by Reuters.

“The timing should have been good for intervention, with U.S. yields still falling in the wake of the WSJ Fed story Friday.”

A Friday report by the Wall Street Journal stated Federal Reserve officials were likely to discuss the size of future interest rate hikes, which reinforced hopes that a Fed pivot could be near.

The USD/JPY pair advanced as high as 151.94 on Friday, a fresh 32-year peak, which prompted the Bank of Japan to intervene in the market in the second confirmed instance in a month, as it bought Japanese Yen. The move triggered a slump in USD/JPY to levels just above 146.00.

Still, some analysts are not convinced that the Japanese Yen is close to fair value.

“When I run some of the parity condition and evaluation models for dollar/yen, you get some really crazy results like the fair value could be at 170,” Damien Boey, chief macro strategist at investment firm Barrenjoey, said.

As of 8:44 GMT on Monday USD/JPY was gaining 1.14% to trade at 149.33. Last week, the major Forex pair climbed as high as 151.94, which has been its strongest level since July 1990.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 148.59
R1 – 151.01
R2 – 154.37
R3 – 156.79
R4 – 159.21

S1 – 145.23
S2 – 142.81
S3 – 139.45
S4 – 136.09