Skip to main content

Sometimes a spark get set a roaring blaze- did the USD/JPY overreact?

The comments from the BOJ and finance officials yesterday is what really spooked the markets and caused a surge in Yen buying as JGB yields rose. That saw the USD/JPY and major Yen crosses slide by around 1000 pips from their recent highs in most cases, including the USD/JPY when taking its current 2023 high, at 151.91. The low yesterday evening, at 141.71 would surely have then priced in any BOJ shift on December 19 anyway? That is perhaps debatable of course, but the charge out of Yen shorts was clear to see, as the carry trade in so many pairs got well and truly burned. This has without doubt dented confidence about holding such positions for the immediate future. Perhaps it was overdue? Well, the technical sign was there and noted here many times when the USD/JPY failed to rise above 151.95. The 2023 high at 151.91 confirmed what I had subsequently warned about- a monster double top on an intra-year basis and as you can see, Japanese officials set the bonfire alight on that yesterday. There will be more to add on all this of course. In the meantime, that 145.07 level remains a potentially important resistance level today 

Ready to Get Started?

Start here. Join 2.9M Libertex users around the world!