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USD/JPY Bull Run Extends, Nears Bull Channel Top

JPY
  • USD/JPY's post-data high at 140.31 marks the best read since mid-November and extends the pair's bull run, rising in 10 of the past 12 sessions.
  • Markets have been happy to buy calls on the crawl higher in spot this week, with Y142.00 call strikes seeing particular focus: over $2.2bln in option notional has been wagered against this strike since the Monday open.
  • Moves follow the mixed reception of comments from Ueda yesterday, with markets reading both hawkish (talking down the need for inflation at/above 2% for policy tweaks) and dovish (uncertain of H2 CPI rebound) tones into his first media appearance.
  • Technically, this rally has tipped the 14-day RSI into overbought territory for the first time since October last year - after which FinMin intervention drove the pair sharply lower.
  • Next upside level crosses at the 140.71 bull channel top drawn off the Jan16 low. Moving average studies are in a bull mode position and this highlights the current positive sentiment.

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