USD/JPY fell, tracking lower UST yield gap. Then focus on the BoJ’s MPC (Friday). On Friday we expect a 25 bp escalate. The USDJPY pair last traded at 155.46, note OCBC currency analysts Frances Cheung and Christopher Wong.
The daily dynamics are bearish
“Economic data is helpful. Reducing the unemployment rate, trade unions are calling for another wage increase of 5-6%. Fast Retailing (Uniqlo) announced that it will increase starting salaries for new employees by 10% and by 5% for other employees. Meiji Yasuda announced an average wage increase of 5% for all 47,000 employees. employees from April.”
“Elsewhere, JP CPI and PPI were higher, paving the way for BoJ policy normalization. The Fed-BoJ policy divergence should result in a further narrowing of the UST-JGB yield gap, which should underpin a broader USD/JPY move towards the downside. There is a risk of a dovish upside as this could suggest that USDJPY’s downward movement may be more limited. ”
“Daily momentum is bearish while RSI is declining. The risk has moved downwards. Next support at 154.30 (23.6% Fibo retracement from September low to January high) and 152.80 (200 DMA). Resistance at 157.15 (21 DMA), 158.80 (last high).”
