On 7 September, USD/JPY plunged below the ¥155 level as the yen strengthened. This article reviews the moves during trading hours and the factors behind them.
At around 16:30 London time on 7 September, USD/JPY broke below the ¥155 mark and plunged on a five-minute chart. The yen's move higher was pronounced in the market, drawing attention to intraday price action.
According to the Bank of Japan's Flow of Funds Accounts, no foreign-exchange intervention by the Japanese authorities has been confirmed during this period. One view cited as a factor explaining the yen's strength is the unwinding of yen-short positions and the closing of yen carry positions. It is also said that there have been no major changes to the assumptions underlying fiscal and monetary policy to date.
From a technical perspective, one view is that if the ¥154.77 pullback support level in USD/JPY fails to hold, the next target could be around ¥151.93. There is also an interpretation that the price formation could be a variant of a head-and-shoulders pattern.
Regarding the relationship between rising crude oil prices and the dollar exchange rate, commentary has suggested that the correlation with a stronger dollar is beginning to break down. Additional analysis has indicated that the US interest-rate outlook and fiscal developments are also affecting periods of yen strength and dollar weakness. There is also speculation that individual investors view the decline in USD/JPY as an opportunity and are buying into it.