The prospect of further growth of USDJPY quotes increases the probability of another intervention by the Japan’s Ministry of Finance. It’s worth mentioning that the level of 150.00 is the key level for USDJPY, and breaking through this level is a signal for possible interventions.
Japan’s new Prime Minister Shigeru Ishiba outlined his position, saying that the country is not ready for a rate hike, while the US data is pushing traders to lower their bets on monetary easing. The country’s new Minister of Finance Katsunobu Kato also warned that unexpected fluctuations in the yen could have a negative impact on companies and households.
On one hand, the USDJPY strengthening is caused by the gradual winding down of plans to raise the Bank of Japan’s key rate. On the other hand, it is also driven by the declining sentiment regarding the Fed’s rate hike.
The September figure for Japan’s manufacturing capacity utilization was released today, and it came in at -5.3% from the previous reading of 2.5%. Tomorrow, the figures of Core Machinery Orders will be released, the forecast expectations for which are also negative.
With the previous value of 8.7%, the expectations now stand at 3.6%, i.e. more than twice as low. Against the background of such a slowdown in the manufacturing sector, the tightening of monetary policy in Japan seems inappropriate.
From a technical point of view, the USDJPY pair is now aiming at completing an upward correction after its three-month weakening. The targets of this correction are in the resistance zone limited by the levels of 151,800-152,000. Coincidentally, these levels are the lower boundary of the price zone from which the Japanese monetary authorities are starting to consider interventions.
The final recommendation is to sell the USDJPY currency pair from the level of 151,800.
The profit is taken at the level of 148,400. The loss is fixed at the level of 155,000.
The volume of the opened position should be chosen in such a way that the value of the possible loss, fixed with the help of a protective stop order, is no more than 2% of the deposit funds.
