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Japanese Government Intervention Warning; Correction Not Yet Complete
Summary:
The Japanese government has renewed warnings of potential market intervention, exerting downward pressure on USDJPY. Technical indicators simultaneously reveal failure to breach key resistance levels, with the probability of short-term retracement gradually increasing.
Sell
TradingUSDJPY
EXP
156.757
Entry Price
154.800
TP
157.900
SL
156.180 -1.025 -0.65%
0
Point
Flat
154.800
TP
CLOSING
156.757
Entry Price
157.900
SL
Fundamentals
Today, USDJPY exhibited elevated volatility driven by dual factors of Japanese political developments and official rhetoric. The Liberal Democratic Party's landslide victory in weekend Lower House elections was initially interpreted by markets as a catalyst for expanded fiscal stimulus and tax adjustments, prompting preemptive yen weakness and pushing USDJPY to intraday highs. However, warnings of potential official intervention from Japan's Ministry of Finance and market participants quickly followed, triggering yen recovery during Asian trading hours and causing USDJPY to surrender partial gains. The overall price action shifted from unilateral strength to oscillating correction.
Three principal themes define the current fundamental landscape:
First, political and fiscal expectations. The Prime Minister's decisive electoral victory has heightened market expectations for substantial fiscal stimulus, with positioning initially favoring yen depreciation and short-term USDJPY appreciation. Conversely, this simultaneously elevates concerns regarding government debt accumulation and inflationary pressures, which may conversely prompt tighter monetary or exchange rate management measures—creating a complex policy dynamic.
Second, official-market communication. The Finance Minister's statement regarding the need for "professional assessment" in deploying foreign exchange reserves indicates the government's consideration of multiple stabilization tools, including verbal guidance or actual intervention. Markets interpret such rhetoric as a standing deterrent against excessive yen weakness, sentimentally capping USDJPY's upside momentum.
Third, global liquidity and US-Japan rate differentials. US Treasury yields and dollar dynamics remain the central axis—resilient US economic data supporting the interest rate differential would underpin USDJPY's upward probe; conversely, dollar softness would facilitate yen rebound.
Technical Analysis
From the daily chart perspective, critical resistance for USDJPY is identified near 157.80. Today's session witnessed an intraday spike toward this threshold followed by immediate rejection, demonstrating formidable supply pressure and incrementally elevating short-term downside correction risk. A decisive breakout with sustained consolidation above this level would open the ascending channel toward the 160.00 psychological handle.
Conversely, initial support is established near 155.50. A confirmed breach of this floor would expose further downside toward the 154.60 vicinity.
Trade Recommendations
Trade Direction: Sell
Entry Price: 156.60
Target Price: 154.80
Stop Loss: 157.90
Valid Until: Feburary 23, 2026, 23:00:00
Support: 155.50/154.60
Resistance Levels: 157.80/159.44
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