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FOREX: USDJPY Bear Cycle Extension, Initial Support Holds

FOREX
BulletMarketsForeign Exchange Bullets
  • USDJPY downside momentum gained traction on Wednesday, following a break of short-term support at 153.72, the Jan 27 low. The move marks an extension of the bear cycle that started Jan 10. Both sides of the trade have been working in tandem as the USD index extends its pullback to roughly 2.3%, and stronger-than-expected Japanese wage data assists a more hawkish BOJ narrative.
  • We previously noted support at 152.55, a Fibonacci retracement, which has held at first attempt. However, should the short-term sentiment extend through US hours, more meaningful support is found at 151.81, the Dec 12 low. Below here, attention would be on 151.06, the 76.4% retracement of the Dec 3 - Jan 10 bull leg.  
  • SocGen questions if USDJPY can fall much further "if the US economy remains robust, the Fed doesn’t ease much further and Treasury yields remain, essentially, rangebound". They, instead, see a "short-term solution [of] selling EURJPY [...] where the deterioration in Eurozone growth expectations relative to Japan is striking".
  • Further weakness in the cross would place attention on 156.99, the Dec 4 low, and 156.18, the Dec 3 low and a key support.
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  • USDJPY downside momentum gained traction on Wednesday, following a break of short-term support at 153.72, the Jan 27 low. The move marks an extension of the bear cycle that started Jan 10. Both sides of the trade have been working in tandem as the USD index extends its pullback to roughly 2.3%, and stronger-than-expected Japanese wage data assists a more hawkish BOJ narrative.
  • We previously noted support at 152.55, a Fibonacci retracement, which has held at first attempt. However, should the short-term sentiment extend through US hours, more meaningful support is found at 151.81, the Dec 12 low. Below here, attention would be on 151.06, the 76.4% retracement of the Dec 3 - Jan 10 bull leg.  
  • SocGen questions if USDJPY can fall much further "if the US economy remains robust, the Fed doesn’t ease much further and Treasury yields remain, essentially, rangebound". They, instead, see a "short-term solution [of] selling EURJPY [...] where the deterioration in Eurozone growth expectations relative to Japan is striking".
  • Further weakness in the cross would place attention on 156.99, the Dec 4 low, and 156.18, the Dec 3 low and a key support.