Fed prepares intervention in the yen? "Rate Check" Crash Risk Signal Similar to August 2024

[Igor Pereira]

Traders, the dynamics of the exchange market have changed dramatically in the last few hours. What until yesterday was speculation about an isolated action from Japan evolved into a scenario of high danger: Coordinated intervention with the Federal Reserve.

By Igor Pereira Financial Market Analyst

Reports of institutional terminals confirm that the Federal Reserve Bank New York conducted a "rate check" (rate check) with the main global banks. In the institutional jargon, this amounts to "showing the gun" before pulling the trigger.

Below, the complete analysis of why the scenario of "August 2024" is about to repeat itself and how to position itself before this liquidity event.

The Fed doesn't care about operating tables asking yen quotes out of curiosity.

• The Message: When the New York Fed conducts this check, it is a coordinated warning with the Japanese Ministry of Finance. The message for speculators is clear: "We're ready to sell dollars and buy yen in bulk."

• The Immediate Reaction: Just with the rumor of this operation, the yen has already jumped 1.6%, reaching 155.90, its strongest level since December. When physical intervention (real USD sale) occurs, volatility will be exponential.

We are facing a technical configuration that mirrors the collapse of August 2024.

• The Carry Trade Shock: A coordinated intervention forces a violent and sudden appreciation of the yen. It destroys the logic of Carry Trade (where investors borrow cheap yen to buy risk assets like Tech Stocks and Crypto).

• Forced Settlement: With the Yen valuing themselves, these loans get more expensive. To cover margin calls, leveraged funds are required to sell their risk assets. The likely result is a "Flash Crash" in S&P 500 and Bitcoin in the coming days.

Although the immediate risk is falling, the mechanics of the intervention create an opportunity of gold soon thereafter.

• The Currency Exchange: To intervene, the US (or Japan via Fed accounts) need to sell dollars on the open market to buy Yen.

• Liquidity injection: This action increases the offer of Dollars (USD Supply) in the global financial system. Weaker dollar, historically, means looser financial conditions.

• The Cycle:

  1. Initial Crash: The Yen rises, risk assets (Crypto/Actions) fall violently due to deleveraging.

  2. Stabilization: The market absorbs liquidation.

  3. Explosive rally: The new liquidity of Dollars enters the system, driving aggressive recovery in risk assets.

Conclusion and ExpertFX Strategy

Fed winked. They signaled that they will not tolerate a dollar so strong as to break the Japanese economy.

My Vision: We're entering the Danger Zone in 48 hours.

1. (Short) USD/JPY: Don't stand in front of the Fed and the Bank of Japan operating on dollar right now.

2. Get ready to buy the Panic: If we see a violent liquidation in Crypto and Actions (repeat August 2024 standard), view it as the opportunity to buy the quarter. It will be the final "cleaning" before the liquidity injection takes effect.

---

Premium access: The Turnpoint

Our algorithms calculated the exact level of sales exhaustion in the S&P 500 where the liquidation of the Carry Trade You must stop. That's where Smart Money's gonna go shopping.

Ensure your place in the elite market: "> CLICK HERE TO ACCESS THE PICTURE