USD/JPY may finally get clear of congestion by 112 after Friday's U.S. GDP report, but follow-through could disappoint specs already heavily long at fairly high average prices nL1N2240E3.
With the start of the new Japanese fiscal year there's a bullish USD/JPY seasonal bias boosted by Japanese demand for U.S. assets nL1N225052.
In recent years, that demand was aided by U.S. economic growth tending to underperform in Q1 and rebound in Q2, lifting already attractive yields on Treasuries.
Over the last four years, USD/JPY's average price gained 2.6 percent between its mid-April low and June 1 swing high.
With the BOJ seen on hold Thursday night, the focus remains on U.S. data and yield moves after Friday's Q1 GDP and in response to next week's PMIs, jobs report and FOMC meeting.
A strong GDP may get USD/JPY above 112+ offers and toward the downtrend line off 2018 highs, now at 112.83.
The sharp drop in options gamma from Friday through next week and nearly five-year lows in 1-month vols may create enough space to reach smaller expiries near the trendline into next week's event risks.
Decent 112 expiries Monday and Tuesday hint at bigger moves later in the week in Japan holiday-thinned trading nL1N2240NN.