USDJPY Slows on Approach to 160 Zone as Japan’s Authorities Repeat Signals of Potential Intervention

USDJPY keeps firm tone and trading near psychological 160 barrier, with near term action being slower on Friday, in comparison to strong gains in previous few sessions.

The pair is on track for the weekly gain after being held in red for the three consecutive weeks, with technical picture on daily and weekly chart being predominantly bullish but overbought on daily chart.

On the other hand, the pair is pressuring 160 resistance zone, often seen as a trigger for the intervention of Japanese authorities, to prevent further weakening of the national currency.

From that perspective we need to see the latest comments from Japan’s Fin Min, who warned of decisive action at 160 zone, which marks a verbal intervention and confirms Japan’s readiness to take an action.

The Bank of Japan policymakers will meet next Tuesday, with widely expected decision to stay on hold this time, mainly due to high uncertainty over the situation in the Middle East and yen’s trajectory.

Japanese policymakers also remain concerned about inflation driven by imports in situation on persistently weak yen, that adds to the view that Apr 28 meeting decision may not be neutral hold, with vote count to be in focus.

After March unanimous (9-0) vote, any divergence from this configuration would be a hawkish signal that the board is laying groundwork for rate hikes later this year.

Initial support lays at 159.18 (converged 10/20DMAs) followed by more significant 158.52 level (Fibo 23.6% of 152.26/160.46 rally / floor of the recent range) firm break of which to expose next strong supports at 157.60/30 zone (recent spike lows / Fibo 38.2%).