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JPY on Front Foot in Corrective Bounce, But USD/JPY Bias Remains Higher

FOREX
  • The JPY trades on the front foot early Friday, in a corrective bounce for the currency that's weakened since the first BoJ rate hike for decades earlier this week. Markets remain in close proximity to levels at which the Japanese authorities intervened in recent years, but recent evidence of an underlying long USD/JPY bias continues to argue for a further grind higher in the pair. Today's USD strength evident in EUR/USD, GBP/USD weakness adds to this argument.
  • The real test for USD/JPY remains higher: longer-term resistance is next up - A multi-year bull channel, drawn from the September 2012 low, clearly shows the importance of resistance at the 152.50 area. Channel top was tested in Oct‘22 and in October last year.
  • The USD Index is firmer, clearing the 104.00 handle early Friday and narrowing in on the February highs. Prices are on the cusp of forming a golden cross formation (50-dma moving above 200-dma) for the first time since September last year - signaling near-term momentum is pointed higher.
  • Focus ahead rests on the central bank speaker slate - ECB's Centeno and Lane are set to make appearances. MNI held an event with Nagel earlier today, at which he stuck to the rhetoric of a higher probability of a June rate cut at the ECB. Fed's Barr and Bostic are also set to make appearances. Powell is set to deliver opening remarks at a Fed Listens event.
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