The yen chooses a path: opinions and doubts
The risk of intervention is increasing ahead of the BOJ meeting. The regulator is unlikely to change its calm policy to an overly aggressive one, but the Japanese currency has been in the danger zone for a long time and requires decisive action. ⠀ U.S. Treasury Secretary Yellen met with the finance ministers of Japan and South Korea and agreed to the idea of supporting their currencies if necessary. Judging by the joint statement, Japan has managed to justify its currency policy stance to its G7 partners. ⠀ The public sentiment towards the weak yen has sharply deteriorated: another attempt at USD/JPY growth was accompanied by the fall of Japanese shares. In addition, a series of comments from business leaders have followed over the past two weeks, making it already politically costly for the yen to fall further. ⠀ Analysts are confident that the next BOJ rate hike is imminent in June and will be stronger than the market expects. And this time the Japanese monetary regulator will not limit itself to verbal interventions. ⠀ At the moment, the yen against the dollar is trading at the weakest levels since June 1990. The probability of a test of the key resistance at 156.50-157.50 is estimated at 85-90%, which may trigger a series of hidden but regular currency interventions to strengthen the national currency. ⠀ There is also the possibility of one major intervention that would first bring the dollar down to almost ¥150, followed by smaller manipulations to further depreciate the exchange rate. ⠀ So opening new positions in yen and other Japanese assets is not recommended yet - the market should analyze the BOJ comments, especially since large options in the 153.50-150 zone close only tomorrow. Let speculators work out their targets, and we will start selling next week. ⠀ Profits to y’all!
