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USD/JPY recovers after a huge intraday drop of more than 500 pips and is back around 141.00

  • USD/JPY pulls back sharply from a new 24-year high after Japan intervenes in the forex market.
  • The USD’s intraday corrective pullback from a two-decade high contributes to the sharp decline.
  • Rising US bond yields and policy divergence between the Fed and the Bank of Japan limit further losses, at least for now.

The pair USD/JPY underwent a dramatic intraday turnaround on Thursday and plunged more than 550 pips from around 146.00, or a new 24-year high hit on Thursday. The pair maintains its heavily bid tone throughout the early European session and hits a near three-week low in the last hour, though recovers afterwards.

The Japanese authorities intervened in the foreign exchange market for the first time since 1998 to stop the rapid decline of the national currency and cause a sell-off around the USD/JPY pair. The strong intraday rally in the Japanese yen allowed dollar bulls to take some gains, especially after the recent sharp rise to a two-decade high. This was seen as another factor that aggravated the bearish pressure surrounding the pair.

However, a recovery in risk sentiment, reflected in a generally positive tone in equity markets, should cap gains in the safe-haven yen. In addition, the new rise in US Treasury bond yields, reinforced by a more aggressive stance from the Federal Reserve, favors the appearance of some dollar purchases. This, in turn, helps the USD/JPY pair bounce back more than 100 pips from the daily low.

It is worth remembering that the Fed raised interest rates by another 75 basis points on Wednesday and signaled further major rate hikes at its upcoming policy meetings. On the contrary, the Bank of Japan did not modify its monetary policy and reiterated that it will continue with a strong monetary easing. This marks a wide divergence in policy outlooks from the Fed and the Bank of Japan, which has been a key factor behind the yen’s more than 25% drop against its US counterpart since early 2022.

Technical levels

USD/JPY

Panorama
Last Price Today 141.4
Today’s Daily Change -2.65
Today’s Daily Change % -1.84
Today’s Daily Opening 144.05
Trends
20 Daily SMA 141.63
50 Daily SMA 137.98
100 Daily SMA 135.2
200 Daily SMA 126.92
levels
Previous Daily High 144.7
Previous Daily Minimum 143.34
Previous Maximum Weekly 144.96
Previous Weekly Minimum 141.66
Monthly Prior Maximum 139.08
Previous Monthly Minimum 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

Source: Fx Street

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