usdmxn

Strong breakdown on USDMXN; More to Come After Rally

USDMXN is in a strong breakdown for the last few months if not years, with recent extensions down to 16.30 after a nice breakdown through the trendline support.

silver

Silver Pulls Back, Support at $24

Silver has been trading sideways since 2021, indicating a corrective move due to its choppy and overlapping price action.

The risks and rewards of trading 152 in USDJPY

Big level. Big moment. Big reactions. Know your trading risk.

Given the price action and market expectations in the last few days leading up to the BOJ, it’s no surprise to see us up at 152 again. As we were saying at Forex Analytix a few weeks before, this was heading towards a ‘buy rumour, sell fact trade’, and probably the most obvious one we’ll get this year.

The weekly chart of USDJPY

USDJPY Weekly chart

So, what do we do now we are again at 152?

  1. It should be noted that we’ve never traded 152 in any of the attempts, so the first thing that sticks out is that there’s likely barriers there.
  2. The MOF/BOJ have twice intervened and jawboned in and around the last two moves there. Doing so once is fine. Twice raises an eyebrow. A third time would ring bells. If the FOMC causes a break that forces Japan to intervene, that would be a clear indication that they do actually have a pain level for USDJPY, despite saying they don’t focus on any particular level.
  3. Whether 152 is a level for them, or not, doesn’t change the fact that the risk of intervention following the BOJ meeting is now very high.
  4. Three big tests over a large period of time means there’s going to be some very chunky stops sitting just above, so a break will likely be volatile. That will likely mean we go to 153 in a flash, and further after. But, that again increases the risk of intervention.
  5. It’s not all about USDJPY (for intervention purposes). The BOJ looks at JPY as a whole and they look at the JPY NEER, which despite us being at 152 again in UJ, is higher at 80.25 (as of yesterday), than it was (low-sub 79.00’s) when we’ve been here before. That maybe suggests JPY isn’t as weak as before, and thus USDJPY might be allowed to go above 152.
  6. The Fed. Two sides to a pair remember so what the Fed does will affect USD above all else. In that sense, USDJPY moving through or holding 152 will have to be monitored in context with other JPY pairs. USDJPY going up while others like EURJPY, GBPJPY, AUDJPY stay steady or head lower, reduces the intervention risk because it won’t therefore be a yen move. That would be a green light for a break. Conversely, a non-hawkish Fed might mark 152 as yet another top as part of a broad USD sell off.
  7. Whatever happens over the Fed, we will then switch to the JPY side into the Asia session and they’ve not been shy in smashing JPY. The risk is for dip buyers to pile into USDJPY again to push for a 152 break, or come in to support a break.

    As you can see, there’s plenty of reasons why 152 might break or hold and as traders we need to know that there is now much higher risk with trading it than perhaps even before the BOJ meeting. We could be looking at a 200-300 pip move either way just over the next few hours. By comparison, we might be lucky to get a 100 pip range in something like EURUSD, so you need to be more of a risk manager if you want to trade JPY right now.