USDJPY consolidates after sharp post-intervention fall; key supports still hold

USDJPY consolidates within a wide range on Friday after falling over 3% after intervention of Japan’s authorities, aiming to support weakening yen on Thursday.

Friday’s action moves within daily Ichimoku cloud (158.49/160.59) shaped so far in a long-legged Doji, signaling that traders look for fresh direction signal after yen registered the biggest daily gain since Nov 2022.

Although the impact from the intervention was strong, it was insufficient to spark stronger drop, as Thursday’s action surged through thick daily cloud but failed to register daily close below cloud base (158.49, reinforced by Fibo 61.8% of 155.02/163.98 upleg), with brief spike below the cloud base being contained by another strong support at 157.91, provided by 200DMA.

Daily studies have weakened (14-d momentum fell deep into negative territory and DMAs turned to almost full bearish setup, but sustained break below cloud base and 200DMA (also below nearby trendline support at 157.54) is needed to open way for deeper drop and reduce risk of bounce (the current move is still above major supports of larger uptrend).

The pair is on track for strong weekly loss and ends month of July in red that contributes to negative signals.

Markets wait for more information whether Japanese authorities plan to intervene again, to help yen to sustain the latest strong gains.

Res: 160.00; 160.59; 160.88; 161.28
Sup: 158.45; 157.96; 157.54; 157.14