Come what may when the Fed concludes its meeting, it's unlikely to forestall a bearish USD/JPY monthly close on Friday that would put March's 101.18 low in play.
USD/JPY broke supports by 105, though follow-through has been limited to today's 104.80 EBS low by Fed event risk, while daily studies remain oversold.
Other limiting factors include and a report that Japan's finance ministry was monitoring currency markets nT9N2DA012 and Deputy Governor Masayoshi Amamiya said the BOJ would not rule out deepening negative interest rates, despite acknowledging ill effects nL3N2F01YG.
With 10-year and 2-year Treasury-JGB yield spreads at 30- and 6-year lows, respectively, at a puny 55.8bp and 26.6bp, and with little pricing of Fed rate increases for years, USD/JPY looks rich above 100.
Monthly USD/JPY charts show a head-and-shoulders reversal of the 2011-15 uptrend that was bolstered by rebounding Treasury-JGB rates spreads and BOJ QQE and yield curve control.
A close Friday below last August's 106.26 close would be the lowest since September 2016 and reinforce long-term sell signals, that might make MOF threats more credible below 100.
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