The USD/JPY market is stuck just below the 152 region as traders suspect official action if they push it higher
The currency is skirting 35-year lows and interest-rate differentials still overwhelmingly favor selling it in favor of the Dollar. Even though the BoJ has this year shifted away from its ultra-loosesettings, the Yen remains a chronic low-yielder even as the markets reassess the likelihood of heavy US interest-rate reductions this year.
USD/JPY daily trade has narrowed just below the 152-handle in the past ten days. The next major trading cue is likely to be the US nonfarm payroll release on Friday. An upside surprise here could be extremely interesting as it would probably see the Dollar surge up beyond that point, with traders then effectively daring the BoJ to step in.
IG’s own trading sentiment indicator finds the market extremely bearish at current levels, to the tune of a massive 83% of respondents. While this sort of level would normally cry out for a contrarian, bullish play, the sheer volume of bears is probably due entirely to those intervention fears. The uncommitted may be wiser to wait and see how those play out.Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.
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