The pair opened Monday at 159.369 and closed Friday at 159.962, gaining 59 pips or 0.37%. The weekly high reached 160.084 on Wednesday before sellers emerged at the psychologically significant 160.00 level. Volume peaked midweek at 48,345 contracts as price tested resistance.
Japan's Finance Minister Katayama issued fresh intervention threats early Friday, stating authorities were "ready to respond to FX." The warning came as May foreign exchange reserves fell by a record amount, suggesting possible stealth intervention. Despite the verbal warnings, yen barely reacted and USD/JPY held near weekly highs.
Regional instability added to yen weakness. South Korea's KOSPI index plunged while the won hit a 17-year low against the dollar on Thursday. The PBOC set its USD/CNY reference rate higher than estimates, signaling tolerance for yuan weakness. This broader Asian currency selloff kept pressure on the yen.
No high-impact events are scheduled for next week according to the economic calendar. Without major data releases, focus shifts to whether Japanese officials escalate from verbal warnings to actual intervention. If USD/JPY breaks convincingly above 160.00, expect stronger rhetoric from Tokyo. A close below 159.50 could ease immediate intervention concerns.
Current positioning shows 47.9% of traders long and 52.1% short as of Friday morning. The slight short skew suggests traders are wary of chasing the rally near 160.00, possibly positioning for intervention risk. This balanced sentiment leaves room for moves in either direction.
The 160.00 round number remains the key resistance after Wednesday's rejection at 160.084. If price closes above this level, the next obvious target is 160.50. Support sits at the weekly low of 159.36, with a break below potentially targeting 159.00.
Byline: LHFX Research
Risk disclaimer. CFD trading involves substantial risk and is not suitable for every investor. Leverage works both ways and can amplify losses beyond your initial deposit. The analysis above is general market commentary and does not constitute investment advice or a recommendation to buy or sell any instrument. LHFX is regulated by the FSC Mauritius and the FSCA in South Africa.
