Without a shadow of a doubt, the protagonist of the market, and this time not only of Forex, is certainly the exchange rate UsdJpy which collapses during the night after a very strong acceleration from just above i 158.50 up to 160.20, a level from which it only collapsed. The intervention of the Bank of Japan has not been confirmed at the moment but, given the volatility and the very strong similarity of the movement to those seen in 2022, i.e. 5-6 figures intradayit seems that the Bank of Japan intervened with a certain probability. We can only hypothesize his intervention based on the type of movement and if history repeats itself, as one of Dow’s principles states, then we can affirm that the intervention took place and all that is missing is confirmation from Japan.
CHRONICLE OF TODAY’S MOVEMENT
Forex opening in the absence of cash trading in Japan due to holiday dedicated to the commemoration of Emperor ShowaUsdJpy had just returned from a fiery Friday with very strong bullish accelerations which brought the exchange rate well above the target we had set ourselves in previous analyses, i.e. the level 158, projection of the exchange rate movement between the BoJ’s first and second interventions on the market in 2022. Opening of negotiations on UsdJpy with a first timid attempt to descend towards i 158.10a level from which a bullish movement first started in line with the volatility seen in the last days of last week, then the strong acceleration that brought the exchange rate from 158.60 to 160.20 in just one minute. An absolutely anomalous movement, a harbinger of a strong descent, a real squeeze which demolished all the shorts present among the 158 hey 160, extremely high levels for this gearbox. The movement can be seen in the 1 minute timeframe graph attached.
THE
1 minute timeframe move that led to the squeeze before the crash – Source:XStation
In the following minutes, volatility remains high and the market drops to 159a level that acted as support until the other important movement of the day, the bearish one, much stronger than the squeeze, which led the exchange rate to reach 155 in the space of an hour, between 6 and 7 in the morning. The market tries to hold up the prices but the collapse continues after an attempted rebound which occurred at the European cash opening, an attempt which ended badly and which led the exchange rate to reach new lows in the area 154.60. Overall, the bearish movement amounted to approximately 5.5 figures (approximately 550 points), same dynamics as the two previous interventions in 2022.
6am Downward Continuation Move – Source:XStation
The first occurred in September 2022movement of approximately 5.5 figures, as well as that of October 2022, also of approximately 5.5 figures. The magnitude of the current movement, similar to those of 2022, leaves little room for interpretations and it follows that much the BoJ probably intervened on Forex. For today the exchange rate has probably done its duty, waiting for tomorrow when the weekly dynamics will close and this does not exclude a retest of those 158 as a crucial level to definitively reverse the bullish dynamic seen for a few years now. They will play a crucial role i Japanese government bond yieldsfor the moment close to the 1% barrier, close to 0.92%another weapon that the BoJ has to further push exchange rates downwards.
Collapse on the Boj’s first intervention of 2022 – Source:XStation
Collapse on the BoJ’s second intervention of 2022 – Source:XStation
THE REACTION OF OTHER MARKETS
The stock markets seem not to have felt the blow, much less the other major exchange rates which continued on their way with tests of the maximums on a weekly basis. This confirms even more strongly that the UsdJpy case is an isolated case to the Yen alone, bought massively by the BoJ itself. At the moment, as mentioned this morning in the analysis that we invite you to reviewstock markets could see retracements and continue this multi-week accumulation phase before the market mover data of unemployment rate.
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