USD/JPY is manipulated

Note: This section contains information in English only.
Source: Dukascopy Bank SA


On May 1, US monetary policy makers, who decide upon the supply of the US Dollar, announced the Federal Funds Rate. The rate is used as a base rate for all USD denominated debt. The Fed has kept the interest rate unchanged at 5.50%, as the financial markets expected. In addition, the central bank has published the Federal Open Markets Committee Statement. The statement reveals the basing of the decision by the committee that decides upon the policy. The initial reaction to the news was a dip of the USD, as the Fed had reduced the balance sheet redaction to $300 billion from $720 billion when the program was started in 2022.

However, most price action occurred during the follow up press conference at 18:30 GMT up to 19:30 GMT. The press conference is more notable due to the Chairman of the Federal Reserve taking journalist questions. If the journalists do their job properly, they get more information out of the Chairman about the future supply and value of the USD.

In general, the Chairman said that the Fed is not thinking to do anything. It would take a lot of bad economic data for the Fed to cut interest rates. Meanwhile, potential hikes would take a lot higher than current inflation. Moreover, the Chairman expressed that inflation should decrease when the winter passes and shelter costs decrease. Namely, as people spend less for heating, inflation numbers are set to go down.

During these events, the Bank of Japan intervened in the market and started to buy up the Yen. Namely, it added massive energy to the move in an effort to strengthen the national currency. As a result of the fundamentals and market manipulation, the USD/JPY declined and found support in the weekly S2 at 152.99 and the 153.00 level. As soon as the central bankers thought the job is done, the pair retraced and on Thursday faced the resistance of the 155.00 level and the 200-hour simple moving average.

In the near term future, if the markets give up and the USD/JPY declines, the rate would look for support in the 154.50 level. Further below note that the 153.00 and the weekly S2 have also shown to be capable of acting as support. Even further down, watch round exchange rate levels that could reverse a decline, before the pair reaches the 150.00 mark.

If the Bank of Japan fails in its attempts to start a broader decline, the pair would surge and test two resistance clusters. First of all, the combination of 156.00 level, the weekly 200-hour simple moving average and the weekly S1 simple pivot point might impact the rate. Higher above, note the 157.00 mark that is strengthened by the 50 and 100-hour simple moving averages and the weekly simple pivot point.
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