Hello, this is Lucky.

The USD/JPY has moved quite a bit, hasn’t it?

At one point, the yen weakened to the 160 level, but afterward it sharply strengthened.

There were also moments today where it dropped to the 155 levelas well.

Once it has come back this far,

some may think, "Maybe the currency intervention talk is over?"

But I don’t see it that way yet.

Rather, this time, when looking at future USD/JPYthere are quite important remarksthat have been made.

The Ministry of Finance is still in “combat readiness”

On September 4, Finance Minister Shibayama said about the FX market that

“the stance of remaining in combat readiness does not change”

andnbsp;has stated this.

Furthermore, he revealed that he remains in continuous contact with the US currency authorities as well.

This is important.

The USD/JPY has moved from the 160s to the 155s, a fairly strong yen appreciation direction.

Even so, Japanese authorities have not relaxed their vigilance by saying,

“We’re done now.”

Thus, I think the追加介入というカードは、まだ消えていない

in my view.

However, this does not mean “they will intervene immediately.”

They are maintaining a state of alert.

First, it is important to separate this out in our thinking.

There is no confirmation of an additional intervention during the fall to around 155

Let's be sure not to get this wrong.

Just because USD/JPY moved sharply toward the yen strength does not mean

“they intervened again!”

should be assumed.

At this point, regarding the current yen-strength phase,no new real-cash intervention has been confirmed.

One of the factors that the market pays a lot of attention to is

the possibility of additional rate hikes by the BOJ.

One of the major reasons the yen has been selling off is the interest rate differential between Japan and the US.

However, if the market increasingly suspects that the BOJ will raise rates further, there will be moves to unwind the yen-selling positions that had built up until then.

Even that alone can cause a large drop in USD/JPY.

“Moves big, equals intervention”

is not necessarily the case.

This is a very important point when evaluating the market.

So, what should we look at from here?

What I am focusing on for the future USD/JPY is

not only the price, but the speed of movement

For example, going forward,

155 yen
↓
157 yen
↓
159 yen
↓
160 yen

If it returns gradually over time,

whereas it might instead rise rapidly in a short period from the 155s to

158 → 159 → 160

in a rapid yen depreciation, the meaning would be completely different.

What the government and the Finance Ministry are watching is

not simply,

“it reached 160, so it’s bad.”

But also how it approaches 160.

Authorities have long viewed excessive volatility and one-sided moves as problematic.

That’s why I’ve been saying for a while now that

“160 yen = intervention guaranteed”

isn’t necessarily a good framing.

The number 160 is certainly a level that market participants are keenly watching.

But what really matters is

how the move toward 160 is being made

and what path it takes.

It’s not just the price, but

the process that matters.

This is important.

This time, I also want to watch the coordination with the US

And one more thing.

What should not be forgotten in this market is

the coordination with the US.

Last time, there was actual coordinated intervention by Japan and the US.

And currently, the Japanese side is still in contact with the US authorities.

However, please don’t misunderstand this.

“Coordinated intervention between Japan and the US is guaranteed next time.”

This is extremely important.

Taking into account the current American stance,

“we will definitely intervene again with the US”

is premature to assume.

On the other hand, from the market participants’ perspective,

the possibility of some form of again coordinated action has not completely disappeared.

This in itself remains a source of caution.

That’s why

the simple market of “buy USD/JPY just because it rose above 160”

From here, I see three main scenarios

1) It settles around 155–157

In this case, I think the vigilance for intervention will recede temporarily.

We’d watch the BOJ policy stance and US rate trends to determine the next direction.

2) It returns to 159–160 again

From here, the market may again grow wary of the Finance Ministry’s statements.

Especially around 160,

“Will the authorities say something again?”

becomes a likely expectation.

3) It breaks through 160 briefly and heads to 161–162

I am most wary of this scenario.

The issue isn’t merely breaking above 160.

It is the rapid move in one direction in a short time.

If this happens, the market could be thinking of

This is a possible flow of thinking.

When you’re a beginner, you might say things like

“It’s at 160.”

“It fell to 155.”

and focus only on the price.

But as you become a winning trader, you’ll start to look at

“why did it move that much?”

This time, is it the BOJ rate hike expectations?

US rate trends?

A unwind of yen-selling positions?

The Finance Ministry’s statements?

Or truly an FX intervention?

Even with the same five-yen drop,

the subsequent market moves depend on the reason.

Develop the habit of thinking about this.

the ability to read the market

and so on.

And I think the current USD/JPY is in a very interesting phase.

What the market is aware of is

“the BOJ’s additional rate hike”

“the potential for additional intervention by the government and Finance Ministry”

However, neither should be assumed as certain to occur.

What matters is

to what extent the market prices in that possibility and how participants respond.

If USD/JPY returns toward 160 again in the future,

how fast it does so,

what the Finance Ministry will say,

how the US will react,

how the BOJ’s rate hike expectations are changing.

I’ll be watching these closely.

If there are other significant moves, I’ll share them as well.

The market cannot be won by looking at news alone.

What matters is what market participants will do next after seeing the news.

That is crucial.

Well then, until the next article, see you again(^^)

GoGoJION Certified Trade Meister
Pro Trader Lucky