USD/JPY Plunges to Four-Week Lows Amid Japanese Yen Intervention Speculation
The USD/JPY pair is experiencing intense selling pressure for the second consecutive day, plunging to nearly four-week lows around 157.25-157.20 during the early European session on Thursday.
Traders are on high alert due to speculation that authorities conducted a rate check, which could signal an intervention to support the Japanese Yen (JPY). Additionally, more hawkish repricing of Bank of Japan (BoJ) rate hike expectations is boosting the JPY. This, combined with a weaker US Dollar (USD), is exerting downward pressure on the USD/JPY pair.
From a technical perspective, Wednesday's failed attempt to breach the 200-period Simple Moving Average (SMA) on the 4-hour chart and subsequent decline favor bearish traders. The Moving Average Convergence Divergence (MACD) indicator is negative, while the Relative Strength Index (RSI) sits in oversold territory, indicating persistent downside pressure.
Some analysts believe that a follow-through weakness below the 157.00 mark towards testing the 156.60-156.50 horizontal support zone looks possible. The downward trajectory could extend further towards challenging the August monthly swing low around the 155.25-155.20 region, with some intermediate support near the 156.00 round figure.
On the topside, any attempted recovery is likely to attract fresh sellers near 158.00, capping the USD/JPY pair near the 158.40-158.50 pivotal resistance zone. Acceptance above the latter would be needed to ease the current bearish bias and signal a more sustainable rebound.