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USD/JPY Falters Above 135.00, But Dips Towards 134.00 Supported

JPY

USD/JPY topped out above 135.00 not long after the post Asia close on Friday. The pair pulled back to the low 134.00 region, where support was evident. At the start of this week, we sit slightly higher, currently tracking at 134.25/30. Note the 200-day EMA comes in close to 133.90 on the downside, while the 100-day is around 134.75, which we breached on Friday, but couldn't hold above.

  • The pullback in USD/JPY was consistent with a weaker US yield backdrop through Friday's session, as some Fed speak appeared to calm the notion that the Fed may move back to a +50bps hike pace. The US-JP 10yr swap spread ended Friday's session at +269bps, down from Thursday's high of +275bps.
  • Today's US President's holiday may have driven some profit taking flows as well.
  • Locally, ex BoJ Deputy Governor Iwata stated over the weekend if the BoJ moved too soon to adjust policy the risk would be a return to deflation (see this link).
  • The local data calendar is quiet today. On the 24th of Feb, this Friday, new BoJ Governor Ueda will appear before the lower house of parliament, as part of confirmation hearings.
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