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USDJPY Approaches 142.00 Into The Close, Rising 1.10%

FOREX
  • Higher US yields and no surprises from the Bank of Japan continued to pressure the Japanese yen on Friday with USDJPY rising to a fresh trend high of 141.89 approaching the week’s close. This helped the USD index edge a little higher, stemming the significant overall pressure on the greenback in the aftermath of Wednesday’s FOMC decision.
  • Price action extends USDJPY’s intra-day rally to 1.10% as of writing, and the week’s advance to around 1.75%. Yen weakness was initially fuelled by the overnight unchanged decision from the Bank of Japan. As a reminder, the board on Friday decided unanimously to keep yield curve control policy and pledged to continue patiently with monetary easing amid high economic and financial market uncertainty. The BOJ also kept the forward guidance for the policy rates and pledged to take additional easing measures if necessary.
  • The USDJPY trend condition remains bullish and attention remains on key resistance at the top of a bull channel drawn from the Jan 16 low, which has now been pierced at 141.45. A sustained break of this hurdle would be bullish and open 142.25 the high on Nov 21, 2022.
  • Additionally, EURJPY has traded sharply higher as this week’s bull run extended and sees the pair print as high as 155.22. Price has recently cleared key resistance at 151.61, the May 2 high and an important bull trigger for the pair, confirming a resumption of the longer-term uptrend.
  • A generally optimistic tone for risk has supported the likes of GBP and CAD, the best performers in G10 on Friday. As a reminder, GBP strength comes hot on the heels of stronger-than-expected UK jobs and wage data on Tuesday, which triggered the biggest selloff in short-dated Gilts in over 8 months. The more hawkish BOE pricing has been underpinning the whole move with the technical outlook for cable improving significantly on the breach of 1.2680 an important medium-term technical break.
  • Juneteenth Independence Day holiday in the US on Monday should keep volatility contained. Highlights next week include UK CPI and flash Eurozone PMI. On the central bank slate, the Bank of England, Norges Bank and then SNB will decide on rates.
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