Japan's prime minister announced her policies will boost confidence in the yen. Not the yen itself. Confidence in the yen. Different thing entirely.
The U.S. already tried intervening to help prop up the currency. It fell short. Underwhelming success, they called it. That's what you say when your intervention did f*ck all but you need to file a report about it anyway.
So now Japan's rolling out plan B: just believing harder. Confidence-based monetary policy. The yen will strengthen because everyone will feel better about it strengthening. It's like manifesting but for a G7 currency. Someone get these people a vision board and some crystals.
Retail traders are already pricing this in. They heard "boost confidence" and immediately opened long positions on USD/JPY because they think confidence means the yen goes up. It does not. It never has. They'll figure that out around the same time their stop losses trigger.
The prime minister didn't specify which policies would accomplish this confidence miracle. Probably because the policies don't exist yet. Or they exist but they're the same policies every Japanese government has tried since 1991. Stimulus. Bond buying. Stern statements about monitoring the situation closely. Really inspiring stuff.
Meanwhile the yen sits there doing whatever the hell it was going to do anyway, completely indifferent to speeches and interventions and confidence levels. Because currencies don't care about your feelings. They barely care about your fundamentals.
But sure, confidence will fix it. Confidence fixed the yen in 1998. And 2008. And 2011. And every other time Japan's government announced a new plan to restore faith in their currency. Worked great every single time, which is why they definitely haven't had to do it forty more times since.
The technical setup says the yen's going lower whether Japan's confident about it or not.
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