WIKIFX REPORT: Yen does not waste words. Forecast as of 17.10.2022

The potential for a 29% USDJPY rally since the beginning of the year is still untapped. Only currency interventions can stop the pair's growth. Let us discuss the Forex outlook and make up a trading plan.

Weekly yen fundamental forecast

While the Bank of England is tightening monetary policy, and the Liz Truss government is about to introduce a fiscal stimulus, Japan is doing the opposite. The BoJ will not give up yield curve control and ultra-low interest rates, while the Ministry of Finance is tough on the rapidly falling yen. In such conditions, the pound managed to stabilize, while USDJPY bears only dream of improving the situation.

Japanese officials made contrary statements at a meeting of central bankers and G20 finance ministers. Haruhiko Kuroda insisted that high inflation in Japan is temporary, and by the end of the year, it will fall below the target of 2%, so the Bank of Japan will not abandon the ultra-easy monetary policy.

According to Finance Minister Shunichi Suzuki, the government cannot tolerate excessive USDJPY fluctuations caused by speculation. Although exchange rates are determined by the market, they have an impact on inflation, foreign trade and the economy as a whole. In this regard, it is important to be on alert.

It's hard not to get angry when the massive ¥2.84 trillion currency intervention fails. The dollar is trading near 32-year highs against the yen, and investors wonder when Japanese officials will start another currency intervention.

This will happen either when USDJPY reaches the psychologically important level of 150 or after the volatility increases. It is currently lower than during previous yen purchases, and the government has repeatedly noted that it is concerned about movements, not specific levels.

Dynamics of yen volatility