USDJPY has taken out most reasonable retracement levels as the BoJ’s latest easing move has failed to trigger a sell-off in the JPY. Now we’re entering the danger zone for verbal intervention or worse from Japan.
USDJPY has taken out all reasonable retracement levels in its recent sell-off after a sharp rally off the original sub-78.00 sell-off from earlier this month failed to catch fire in the wake of the BoJ’s new expansion of its QE programme last week. Now we’re back below the psychologically important 78.00 threshold and below the 77.91 level, which was the 0.618 Fibo of the previous rally wave.
If bond markets stay strong here, the only support mayh be the recent low and the threat of verbal intervention or worse from the Japanese authorities – always a treacherous prospect intra-day as the intervention can often spill over to all USD crosses in addition to the JPY crosses. This is also a key day for other JPY crosses, as EURJPY looks below the 100.40/80 zone that was resistance before it headed to 1.03.50+. 100 might be a psychological level of importance there.
John J Hardy,
SAXO BANK