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Apr 18 - 04:55 PM

USD/JPY - Bullish Fed-BoJ Policy Divergence To Put BoJ FX Threat To The Test

By Randolph Donney  —  Apr 18 - 02:40 PM
  • USD/JPY is back up by this week's 154.79 highs as Tsy ylds rebounded

  • The dips in Tsy ylds and USD/JPY from Tuesday's peaks were corrective

  • Hawkish Philly Fed, Fed's Williams and still low claims lifted the dollar

  • USD/JPY rise comes after Wed's US, Japan, S. Korea FinMin FX talks

  • That after weeks of MoF and BoJ warnings about excessive FX moves

  • Market worried 155 is the BoJ's new yen defense line

  • Lots of expiries at 155, talk of barriers there, stops above it

  • Vols and risk-reward show less hedging against a sudden bearish reversal

  • Japan CPI due out on Friday is unlikely to bolster case for more BoJ hikes

  • Main USD/JPY driver remains the Fed and Treasury yields

  • Above 155 are twin 161.8% Fibos by 155.20 from key 2023 lows

  • Might need well below-f/c Japan CPIs to eye 2024's channel top at 156.64

  • That and the BoJ refraining from intervention for now

  • If they do intervene, nearby props are by 153, 152 and 151

  • Worst case is a dive to the weekly cloud top & up TL from 2023's lows by 145

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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