Rally In USD/JPY Slows Down, Option Expiries Eyed

USD/JPY appreciation slowed on Wednesday but the rate managed to eke out a handful of pips worth of gains and extend its current streak to six days in a row. The rate wavered within a relatively narrow range, charting an inside day candlestick.

• Japan's Upper House passed a bill mandating fines for violations of Covid-19 restrictions following earlier approval of the Lower House.
• The organisers of the Tokyo Olympics published the "Playbook" with safety rules for holding the event, although it remains unclear if it will be viable for the games to go ahead.
• There are some notable USD/JPY option roll-offs coming up at the NY cut today:
  • $1.6bn of options with strikes at Y104.30-40
  • $1.4bn of options with strikes at Y105.00
  • $1.0bn of options with strikes at Y105.55-65
• Spot USD/JPY trades flat at Y105.01 as we type. A rally through Feb 2 high of Y105.17 would open up the upper 1.0% 10-DMA envelope at Y105.46. On the flip side, losses past Jan 11 high of Y104.40, a recent breakout level, would shift focus to former channel top at Y103.78.
• Looking ahead, Japanese household spending data will be published on Friday.