USDJPY may weaken due to the intervention of Japanese authorities

The USDJPY currency pair is trading near the psychological resistance of 150.00.

Due to the escalation of the conflict in the Middle East, the US Treasury bond yields and the dollar exchange rate have been growing rapidly.

In the near future, the market's attention will be focused on the speech of US Federal Reserve Chairman Jerome Powell at the Economic Club of New York. His speech may provide additional hints on the Federal Reserve's rate-hike policy path after recent dovish statements by several Fed officials.

According to a Reuters poll, the Fed will leave its key interest rate unchanged not only on November 1 but also probably for an extended period of time before it begins to cut them.

Meanwhile, market participants are preparing for turbulent yen trading.

Fluctuations are likely to increase amid growing concerns, said Tsutomu Soma, a bond and currency trader at Monex Inc. The Japanese authorities could intervene to support the weakening currency. At the same time, the country's domestic currency may come under upward pressure amid speculation of a potential tweak to the Bank of Japan’s monetary policy, Soma added.

With the yen hovering near the weakest in three decades, Finance Minister Shunichi Suzuki sent a warning on Friday. He told his Group of 20 counterparts that there are cases when appropriate responses are required in the currency market.

Japan spent over 9 trillion yen ($60 billion) on three occasions to stop the yen’s decline in September and October last year.

The USDJPY pair touched 150.15 on Oct. 3, then suddenly spiked to 147.30, stoking speculation the authorities had stepped in to support it. The Japanese currency has been relatively stable since then.

The USDJPY pair is forming an upward corrective channel on the daily timeframe. Divergence of the RSI indicator (standard values) on the H4 timeframe increases the possibility of the price decline within the upward channel.

Signal:

The short-term outlook for the USDJPY currency pair is to sell.

The target is at the level of 147.35.

Part of the profit should be fixed near the level of 148.40.

A Stop-loss should be placed at the level of 150.70.

The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.