USD/JPY Eyeing Test Above 142.00, Through Top-End Of Bull Channel

The yen was the weakest performed through Friday's session, losing over 1% against the USD. In early trade today we sit just below session highs from late in NY trade on Friday. The pair last in the 141.85/90 region (highs from Friday just above 141.90). The status quo outcome from the BoJ on Friday has left the yen a comfortable underperformer in the past week (yen the only G10 currency down against the USD over this period).

• Whilst the next policy meeting in July is expected to deliver a higher inflation forecast, Ueda still stressed on Friday the dangers of moving away from easy policy settings prematurely (see this link for more details). He did leave the door ajar for policy shifts though, stating as new data comes in it will be elevated and that could lead to a different policy outcome from prior meetings.
• The technical set up for USD/JPY remains positive. We are through the top end of the bull channel drawn from the Jan 16 high. The break reinforces bullish conditions and confirms a resumption of the uptrend, maintaining the bullish sequence of higher highs and higher lows. This opens 142.25 next, the Nov 21 2022 high. On the downside, support to watch is at 139.16, the 20-day EMA. A break is required to signal a short-term top.
• Given increased rhetoric from the authorities on FX in recent weeks post the break of 140.00, this is likely to remain a focus point for markets in the near term.
• The local data calendar just has May Tokyo condominiums for sale on tap today.