USD/JPY has been getting “the jitters” lately as traders aggressively push the pair lower. However, these traders are having a “nail biting” experience right now because USD/JPY is now in the “intervention zone” (the area that the Bank of Japan started intervening in the currency market last time). It’s caused a lot of craziness in the pair lately.
For instance, check out these huge drops in the pair on the 5 minute chart. These drops are happening within minutes, not hours or days…Click on the chart to enlarge it.
USD/JPY Shaves Off 100 Pips Within Minutes!
I’d be leery of being a short-seller here. The downside gain vs. the upside pain could be harsh if the Bank of Japan (or G-7) decided to intervene in the yen again. It would surprise me if the Bank of Japan allows a “strong yen” to stand in the way of their fragile economic recovery. This doesn’t mean they have to do something about it tomorrow morning. But they aren’t likely to put up with this “overly strong” yen for too long either.
So be careful if you’re shorting any yen pairs out there. An intervention could be very painful.
source from: forexnews
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