USD/JPY Dips Sub 146.00 Before Stabilizing, US-JP 10yr Yields Differentials Lower

USD/JPY got to fresh lows back to mid Jan in US trade on Thursday. We touched 145.90 before rebounding modestly. We couldn't get back above 146.50 and track near 146.40 in the early part of Friday trade. Broader USD sentiment was softer in Thursday trade (the BBDXY falling 0.5%) amid a further yield pull back. Yen slightly underperformed, rising around 0.35%.

• For USD/JPY, the technical picture still views this as a corrective pullback. Note on the downside we have 145.59 the Jan 16 low, but 144.36, the Jan 12 low is judged as key short term support. On the topside the Jan 30 high came in at 147.93.
• US yields were down for Thursday but finished up from low. Weakness was concentrated at the back end, the 10yr down -3.5bps to 3.88% (Thursday lows at 3.815%). Regional US bank concerns helped the US Tsy bid, while better than expected US data didn't shift sentiment much.
• US-JP 10yr yield differentials edged down further (+317bps at the US close on Thursday), although we saw some catch up to the downside from JGB yields yesterday.
• On the data front today we have Jan monetary base data, which is unlikely to move sentiment.
• Note the following in the option expiry space for next Wed: 1.4bn at 147.00 (Wed).