The USD has shown extreme bullish pressure in the last several months, as the narrative in financial markets was to “buy the dollar and sell everything else”, since the USD was the only remaining safe haven, with the FED raising interest rates in a hectic manner. Right now, we’re in the middle of a correction or retracement of the previous narrative and it has turned pretty much into “sell the dollar, buy everything else”.

Stock markets and bonds have turned bullish and that is pinning the USD lower. The JPY has seen some strong buying pressure since the Ministry of Finance of Japan intervened in the forex market several weeks ago. USD/JPY has lost more than 14 cents since then, although, most of the decline in this pair is due to the USD weakness, as markets price in a slower pace of FED rate hikes, and a pause some time early next year.

USD/JPY H4 Chart – MAs Have Turned Into Resistance Now

The 20 SMA is pushing this pair lower

The first crash from 152 came after the intervention toward the end of October, while last week we saw a crash after the softer US consumer inflation CPI. Yesterday this pair lost another 200 pips after the 20 SMA (gray0 rejected the price on the H4 chart during the pullback and the softer US producer inflation PPI did the ignition.

Yesterday FED’s Harker participated in the rate hike debate saying that “as long as we’re moving consistently to collapse inflation down, we can pause.” He added that “I don’t want to move interest rates way up and then way down.” These comments sound like he wants to stop with rate hikes for now, which is how the market has been feeling since the US CPI report was released last week and now the terminal rate top stands at 4.93% from 5.06% early last week.

USD/JPY Live Chart