USD/JPY Touches Cycle Highs, Bulls Await Clean Break

USD/JPY surged past the Y111.00 mark Wednesday, as quarter-end flows bolstered the greenback over the WMR fix, with a spike in JPY futures volumes seen just ahead of the fix. Above-forecast ADP employment data & pending home sales may have provided an additional tailwind to the USD. Worth adding that Wednesday was a Gotobi day in Japan, although the yen held up well in Tokyo hours.

• Suggestions that Japan might extend Covid-19 measures in the Tokyo area continue to do the rounds. Meanwhile, PM Suga suggested that a pick-up in the pace of vaccinations would facilitate economic recovery, while a Jiji report flagged jab supply concerns.
• BoJ's Nakagawa said Wednesday that the central bank should maintain its current monetary stimulus, while retaining flexibility amid shifts in economic and market conditions.
• The BoJ will release their Tankan Survey for the second quarter today and analysts expect improvement across the board. Final Jibun Bank M'fing PMI will take focus later in the day.
• USD/JPY trades flat at Y111.11 as we type. The nearby resistance from Jun 24 high of Y111.12 capped gains yesterday and a clean break here would open up Mar 24, 2020 high of Y111.71. Bears look for a pullback under Jun 22 low of Y110.21, which would bring Jun 21 low of Y109.72 into play.