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USDJPY Flirts With 152.00, Retreats Substantially After BoJ Intervention

The Japanese yen recovered some of its recent losses against the US dollar on Wednesday, following verbal intervention by Japanese Finance Minister Shunichi Suzuki. The USDJPY, down by 0.27% traded at 151.164 at 10.43 GMT, the largest decline since March 8th. Meanwhile, the US dollar received support from better-than-expected Durable Goods Orders numbers for February.

The yen flirted with the psychological 152.00 mark earlier on Wednesday, with USDJPY reaching a high of 151.972.  However, Suzuki’s comments drive the pair back down, as investors opted to lock in their profits. The USDJPY trading pair has come within a touching distance of 152.00 for the second time in a week, signaling the volatility bubbling under.

US Durable Goods Orders rose by 1.4% in February, going above the forecast estimate of 1.2%. This will provide support for the dollar in the intra-day session. Also, the USDJPY upside is propelled by BoJ Governor Kazuo Ueda’s dovish comments on the bank’s interest rate policy. Ueda said on Wednesday that the turn toward accommodative monetary policy was intentional and will likely continue for some time, in view of Japan’s current economic conditions. The BoJ Core CPI data released on Tuesday showed that Japan’s inflation rate reduced to 2.3% year-on-year, more than the forecast 2.5%.

Meanwhile, US Consumer Confidence fell in March, and this could impact spending and weaken the dollar in the coming days. The CB Confidence reading came in at 104.5, substantially missing the forecast 106.9.  Looking ahead, the absence of high-impact data from the US and Japan on Wednesday could help the yen continue its recovery against the dollar, ahead of Thursday’s release of US GDP figures.

Technical analysis

The sellers are in control of the USDJPY market as signaled by the RSI indicator. The downside momentum will likely continue if the exchange rate stays below 151.55. The trading pair will find its support at 151.00. However, a continuation of control by the sellers at that level will break the first support and potentially find another one at 150.70. On the other hand, a move above 151.55 will bring the buyers to control the market, with the first resistance at 151.80. However, sustained control by the buyers could break the resistance and potentially test 152.00. That will also invalidate the upside view.