/JPY: Upswing Loses Steam

Safe haven cross CHF/JPY has found a ceiling near the Y142.00 level as the latest upswing driven by SNB/BoJ policy divergence runs its course.

• In monetary policy meetings held on two consecutive days earlier this month, the SNB delivered a surprise rate hike, while the BoJ reaffirmed its commitment to ultra-loose policy settings.
• Switzerland/Japan 10-Year yield spread has been widening through the first half of the year, with that dynamic accelerating since late May. The gap is close to its widest levels since 2008.
• Momentum studies signal topping potential as the RSI operates in overbought territory, while the rate is unwinding the recent overextended foray above its upper Bollinger band.
• The latest bout of strength allowed the pair to breach Mar 31, 2015 high of Y139.14 and the subsequent round figure of Y140.00 as it soared to Y141.89, the highest point since 1980.
• A clearance of the ceiling formed just shy of Y142.00 by a series of recent intraday highs would remove the key near-term firm layer of resistance, turning focus to psychologically significant round figures located further above.
• Bears need a fall below Jun 24/23 lows of Y139.88/86 to get some reprieve before targeting the 50-DMA/Jun 15 low at Y134.43/134.06.
• Spot CHF/JPY last deals at Y141.50, down 15 pips on the day.