- USD/JPY registered an intraday trend change from the weekly highs reached this Wednesday.
- The Credit Suisse crisis triggers a stock sell-off and boosts demand for the safe haven yen.
- A large intraday USD rally provides some support for the pair and helps limit losses, at least for now.
The pair USD/JPY it pulls back sharply from a fresh weekly high, just above the 135.00 psychological level touched earlier this Wednesday and falls to a fresh 1-month low during the American session. However, it manages to bounce a few points in the last hour and seems to have stabilized just below 133.00.
Global risk sentiment turns lower in reaction to negative news surrounding Swiss lender Credit Suisse, which, in turn, boosts the safe-haven Japanese yen (JPY) and puts strong downward pressure on the USD/JPY pair. Indeed, the top shareholder of the troubled Swiss bank has declared that it will not provide further financial support, as a larger stake would bring additional regulatory hurdles. This fact increases the bank’s default risk and triggers a sell-off in global equity markets.
The yen gets additional support from the fact that Bank of Japan board members discussed the feasibility of further tightening the bond yield control at the January policy meeting. The BOJ’s meeting minutes released on Wednesday also showed general agreement among policy makers that inflation and wages could exceed expectations, suggesting that a gradual withdrawal of its massive stimulus remains in the offing. on the horizon. Investors, however, seem convinced that the Japanese central bank will maintain its dovish stance to support the fragile national economy.
It is worth recalling that the new Bank of Japan Governor, Kazuo Ueda, recently stressed the need to maintain ultra-loose policy, saying the central bank does not intend to move quickly away from a decade of massive easing. Other than this, an intraday US dollar rally of more than 1% helps limit USD/JPY losses, at least for now. Therefore, it will be prudent to wait for selling before positioning for an extension of the recent rejection of the 200 day SMA.
Technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
