Daisaku Ueno, president of Gaitame.com Research Institute Ltd. in Tokyo, commented on Japan’s intervention in the foreign exchange market to halt the yen’s rise after the currency reached a post-war high against the dollar earlier today.
“We don’t know the amount of today’s intervention yet, but I think it was close to a record high. That’s because today’s move was more effective than the past three interventions. The dollar soared 3.88 yen in only about 80 minutes after the intervention started. The fact that the currency climbed faster than the past interventions in a very short time suggests a considerable amount of intervention was carried out.”
“We should watch today’s overseas markets. Technically, the top of the cloud for the dollar on the daily ichimoku chart is at 78.09 yen. The dollar has completely passed through a thick ichimoku cloud. In overseas trading, it’s significant to watch whether the dollar will be able to maintain this level, as the dollar would become top-heavy should Japanese authorities tolerate the dollar falling back into the cloud.”
“The dollar’s 200-day moving average passed 79.87 yen today. Everyone is watching the 200-day average because it fell below 80 yen for the first time last week. Should Japan intervene in overseas markets like the previous two interventions, the key point will be whether the authorities will try to push the dollar toward the 200-day average and the psychologically important 80 yen level.”
Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows. The cloud refers to the area between the first and second leading-span lines on the chart and is used to show an area where buy orders may be clustered.