USD/JPY Pulls Sharply Lower, Earlier Nov Lows Within Sight, BoJ Speak On Tap

USD/JPY dipped sharply in late US trade on Tuesday. The pair getting to a low of 147.33, before recovering modestly. We track in the 147.45/50 region in early Asia Pac trade Wednesday. The yen was the second best G10 performer for Tuesday's session, up over 0.80%. The sharp pull back in US yields and rise in Fed cut odds, after dovish remarks, was the main USD headwind.

• In terms of technicals, we aren't too far away from the Nov 21 low at 147.15, which is a key support point. A break below this level would cancel the recent reversal pattern higher and open 146.48, trendline support drawn from Mar 24. On the topside note the 20-day EMA is at 149.79.
• There still looks to be room to catch up on the downside given the break lower in US-JP 10yr yield differentials. The 10yr spread is at risk of shifting sub +360bps.
• Outside of US yield focus, the local data calendar is empty today. Note we do have BoJ board member Adachi speaking in Ehime at 10:30 Tokyo time (01:30 BST).
• There was some focus late yesterday on large unrealized losses for the BoJ's bond holdings, but Governor Ueda previously has stated this will not impact the implementation of monetary policy (see this BBG link).