05 Apr, 2024

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• USD/JPY remains near multi-decade high despite official warning.
• US NFPs may prompt BoJ intervention.

Download our Complimentary Japanese Yen Q2 technical and Fundamental Forecasts below:

The Japanese Yen picked up a small bid in early European trade after PM Kishida warned fx markets that officials will take appropriate action if there are any further ‘excessive fx moves.’ In what is a verbal warning to Yen speculators, PM Kishida outlined how excessive volatility and disorderly FX moves could hurt financial stability and the Japanese economy and won’t be tolerated. Verbal intervention by either the government or the BoJ is seen as a precursor to official intervention to move the level of the Japanese Yen.

Bank of Japan (BoJ) – Foreign Exchange Market Intervention

Friday’s early warning comes a few hours before the latest US Jobs Report (NFPs), a closely watched release that can affect the value of the US dollar . This month’s report comes on the heels of some hawkish commentary from Fed policymaker Neel Kashkari who said on Thursday that if US inflation remains sticky, then rate cuts this year may not be needed. Financial markets are still penciling in three 25-basis point cuts in 2024, but any signs of a strong labor market in today’s NFP release could change this forecast.

USD /JPY has ticked lower post-official commentary but remains within touching distance of a multi-decade high around the 152 level. The technical outlook for USD/JPY remains positive with a break above 152 opening the way for further gains. The fundamental outlook however suggests that any further move higher will not be tolerated, leaving the market in limbo. Today’s US Jobs Report and any further official Japanese commentary, or intervention, could see the pair move sharply, one way or another.

USD/JPY Daily Price Chart

Retail trader data shows 14.69% of USD/JPY traders are net-long with the ratio of traders short to long at 5.81 to 1.The number of traders net-long is 17.67% lower than yesterday and 5.51% lower than last week, while the number of traders net-short is 6.00% lower than yesterday and 2.79% lower than last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise.

Download the Latest IG Sentiment Report to see how daily/weekly sentiment changes can affect USD/JPY price outlook