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26.12.202405:11 Forex Analysis & Reviews: Will the Bank of Japan Intervene?

Relevance up to 21:00 2024-12-30 UTC--5

Recent media reports have raised concerns about potential intervention by the Bank of Japan due to a significant weakening of the national currency, which has declined by approximately 13% since October. Many banks and investment firms view this as a likely scenario ahead of the Japanese central bank's meeting in January. Let's analyze this situation using technical analysis to find an answer.

Exchange Rates 26.12.2024 analysis

On the daily chart, we apply three Fibonacci time zones:

  1. The first zone from the July peak (brown color).
  2. The second zone from the September low (blue color).
  3. The third zone from the December 3rd low (green color).

We identified a point where three timelines from different zones converge around January 12–13: the 11th line of the brown grid, the 10th line of the blue grid, and the 8th line of the green grid. However, since the chart does not account for future weekends—including the New Year holiday—the adjusted date is closer to January 21–22, coinciding with the BOJ meeting scheduled for January 23–24. It seems that following this meeting, a long-term strengthening of the yen may begin, potentially breaking below the December low and dipping beneath the lower boundary of the ascending pink price channel. In this context, the prospect of intervention becomes less significant, as the USD/JPY pair could decline due to an interest rate hike.

There is still a month until the central bank meeting. During this time, a local decline in the currency pair is possible, potentially approaching either the red line of the descending channel or the pink line of the ascending channel. A short-term rise to the 158.70 level may follow, which could ultimately form a triangular (flag-like) pattern. Alternatively, a different chart pattern might emerge if the price fails to break above the upper boundary of the descending price channel (a descending flag).

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Laurie Bailey,
Analytical expert of InstaSpot
© 2007-2024
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