USD/JPY Eyeing Clear Break Of 50-day EMA On The Downside

Yen was once again close to the top performer within the G10 space. The currency gained 0.68% for Tuesday's session, although lagged NOK (+1.25%). USD/JPY sits in the 140.30/35 region currently, which is close to Tuesday session lows in NY trade. Post the Asia close we saw selling interest emerge on moves back towards the 141.00 level.

• Technically, the focus is likely to be on whether we see a clean break of the 50-day EMA, which intersects at 140.34, right around current spot levels. A clear break of this average would strengthen bearish conditions and open 139.85, the Jun 16 low and the area around the 50-day simple MA. Initial resistance is at 143.01, Monday’s high.
• US-JP rate differentials are tracking lower, the 10yr swap differential back to around +304bps, we were at +318/319bps late last week. Still, the move lower in USD/JPY looks larger than implied by this pull back.
• The 1 month risk reversal sits back at -1.83, not too far off 2023 lows sub -2.00. 1 month implied vol is higher, last at 11.36%, but well below early 2023 highs.
• On the data front today, we have June PPI. The market looks for 0.2% m/m, 4.4% y/y, while core machine orders for May are also out (+1.0% is the m/m consensus estimate).