The United States Treasury just bought yen with Japan. First time they've tag-teamed a currency intervention in over a decade. The yen hit 40-year lows and apparently someone at Treasury decided that was their problem too.
Buying yen. With dollars. To make the yen stronger. Because the Bank of Japan spent thirty years trying to weaken their currency and now they're mad it worked.
This is the same Treasury Department that lectures emerging markets about free-market principles and currency discipline. Turns out those principles have an asterisk. The asterisk says "unless our trade partner's central bank painted itself into a corner with negative rates and now their exporters are complaining."
The coordination is the best part. Two sovereign governments had meetings. Probably conference calls. Maybe a working group. All to decide the correct price of yen per dollar. Not the market price. The correct price. As determined by bureaucrats who've never made a trade in their lives.
Retail traders saw the intervention headlines and immediately opened long positions on USD/JPY because they read somewhere that fighting central banks is stupid. Then they got stopped out when the intervention actually moved the rate. Then they reversed and went short. Then they got stopped out again when the move faded. Now they're googling "what is a currency intervention" and wondering if their broker is scamming them.
The yen is still near 40-year lows, by the way. Interventions don't fix monetary policy divergence. They just give politicians a photo op and cost taxpayers a few billion in FX losses when the position eventually gets unwound at a worse level.
But sure, draw your support and resistance lines around the intervention candle and tell yourself you're trading technically.
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