USD/JPY stumbles lower in quick drop before slight bounce back
The dollar did see early gains ease up a little as we got into European trading and that saw USD/JPY pare its advance from 163.70 to around 163.30-40 levels. But in the last 10-15 minutes, there is a quick drop now in the currency pair with it falling by 100 pips to 162.28 before a light bounce again.
I wouldn’t pin this as intervention but perhaps there are some stops triggered and some jitters in the break below the recent lows around 163.30. A better picture would be the hourly chart (second one) in that we are seeing a push back below the 200-hour moving average (blue line). That could be a key consideration in triggering stops on the way down.
[USD/JPY 5-minute chart]
[USD/JPY hourly chart]
As we see that, the dollar is also paring gains across the board with EUR/USD now back up to 1.1470 levels from around 1.1435 earlier in the day. Meanwhile, AUD/USD is pushing back up by 0.3% to 0.6975 from around 0.6950 earlier in the session.
Month-end shenanigans in play perhaps? It’s tough to say. But for now, I don’t think there is anything untoward or any major intervention plot by Tokyo officials today – not at least based on the above.
All that being said, just continue to keep an eye out on the bond market. 10-year Treasury yields remain underpinned near 4.70% and 30-year yields are pushing to 5.23% today. Those are some big levels that if extended further, could really invite pressure on broader risk sentiment. And in turn, that should rightfully provide a tailwind for the dollar.
But again, perhaps that will be made much clearer once we do get past month-end trading.
This article was written by Justin Low at investinglive.com.