The extreme volatility in USD/JPY continues. Jumps or falls of 150 pips are being more and more common, yet in general, the pair is significantly lower, and already marked the 95.50 line as support, just above the closely watched 95 line.
Will the authorities in Japan intervene to weaken the yen? Given recent comments this cannot be ruled out.
Update: a new low was seen – 95.27. Will the pair break 95 on the Non-Farm Payrolls?
Update: Non-Farm Payrolls +175K, unemployment rate 7.6% – The slightly better than expected outcome was an opportunity for a big dollar comeback, however, it wasn’t a one-way street. USD/JPY on the rise. Perhaps the intervention will wait
The total crash of the US dollar followed a mediocre jobless claims report and a calm message from the ECB, basically putting a negative deposit rate on the backburner. After a long run of the US dollar, the correction proved to be much more significant than thought.
Expectations for tapering QE haven fallen. One big event that can confirm or smash these expectations is the Non-Farm Payrolls report. A good figure will raise expectations of an early tapering and will boost the dollar. Another report showing slow growth will serve as a confirmation for no tapering in the near future, and will fuel the dollar bears.
For Japan, further strengthening of the yen is not welcome. It seems that they prefer a range of 100-105 – a perfect balance between competitive exports but without losing control.
If USD/JPY falls below 95, it will not please them, to say the least. However, making a full intervention will not be welcomed by the US and other partners.
At the moment, Japanese officials are only raising their tone: from “not commenting on FX moves†to “closely watching FX moves“. Hamada said that  the BOJ should ease monetary policy if yen rises further
This talk is likely to continue at current levels. If the talk and the NFP will not help, an intervention cannot be ruled out.
Fore more lines, event and analysis, see the USD/JPY forecast. Here is a 1H chart where the madness is clearly seen:
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