USDJPY:
The yen enjoys fundamental support on expectations of a firmer tone from the Bank of Japan. Minutes from the latest meeting noted discussion of a relatively near-term rate increase, and markets already price a high probability of action in the coming months. This narrows the perceived yield differential with the U.S. and reduces the appeal of long dollar positions against the yen.
The external backdrop adds support: risks of U.S. federal agency shutdowns and related uncertainty around key data releases temper interest in the dollar as a haven, in favor of currencies with strong balance-sheet quality, including the yen.
After an unsuccessful attempt to hold above 150.00, participants have taken profit and shifted focus to a possible slowdown in the dollar’s momentum. In this environment, the short-term strategy is to sell the dollar on rallies against the yen, counting on further JPY strengthening if U.S. data and headlines retain a cautious tone.
Trading recommendation: SELL 148.25, SL 149.05, TP 147.25
Origin: FreshForex
