The Japanese Yen (JPY) staged a sharp rebound against the US Dollar (USD) on Friday, raising speculation about potential action by the Japanese Ministry of Finance (MoF).
The USD/JPY chart accelerated its reversal from 40-year highs near 163.00, finding support at a previous resistance level of 161.00
Yen’s recovery is lacking a clear driver, which has put JPY sellers on their toes, wary of a new round of interventions, as Friday’s July 4 holiday in the US provides an ideal opportunity for Tokyo authorities to optimise the impact of their actions. Asked about the Yen’s sudden recovery, the Japanese Finance Minister Satsuki Katayama declined to make any comment, as reported by Reuters. Earlier on the day, Toshihiro Nagahama, a private-sector member on Japanese Prime Minister Takaichi’s Council on Economic and Fiscal Policy, affirmed that he expects the Bank of Japan (BoJ) to hike interest rates again before the end of the year.
These comments, however, are unlikely to have boosted the JPY’s comeback, as they just confirm a scenario already priced in by the market. Technical Analysis: Next supports are at 161.00 and 160.50 USD/JPY trades at 161.24, after trimming the previous day’s losses with momentum indicators picking up from oversold levels. Intraday charts, however, highlight a strong immediate bearish bias, with the four-hour Relative Strength Index (14) just above 30, hinting at stretched conditions, with the Moving Average Convergence Divergence (MACD) has turned negative, reinforcing waning upside momentum.