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Jun 14 - 01:55 PM

COMMENT - USD/JPY Chops, EUR/JPY Precarious On French Election Jitters

By Justin Mcqueen  —  Jun 14 - 12:20 PM

An overall choppy session for USD/JPY to close out the week where the Bank of Japan’s decision to leave policy unchanged disappointed the outside chance that they may have cut bond purchases at this meeting.

Though the pair rallied above 158, the move was short-lived with French election jitters driving the action, prompting a flight to safety as demand for FX havens picked up.
That said, given the risk has been Eurocentric, the dollar has also benefited and thus USD/JPY trades flat.

Instead, yen upside on haven flows will be better expressed against the euro leading into the first round of the French election.
In turn, the traders should closely watch the Bund-OAT 10-year spread – widest since 2017 – as a guide to EUR/JPY direction in the short-run.

On the technical front, those looking for EUR/JPY downside, the 55-day MA (167.19), which has largely defined the uptrend this year, is important support.
A break below may well exacerbate downside momentum.

For USD/JPY, dip buying remains a prominent feature of the pair, with U.S. stocks at the all-time highs and with the Fed dots now showing one 2024 cut, there are seemingly few reasons not to hold the greenback -- unless there is a notable deterioration in the data.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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