USDJPY Tags Fresh Cycle High

The yen finds itself at the bottom of the table in early Tokyo dealing. A reminder that wider market liquidity is inhibited by various national holidays centering on the elongated Easter weekend.

• Goto-bi linked demand surrounding the Tokyo fix has been earmarked as a potential driver when it comes to the latest leg higher.
• Worry surrounding the potential for an EU ban or Russian oil imports supported oil in NY dealing and may have played into JPY weakness in early Tokyo trade, as local participants reacted to that move, as well as Thursday’s move higher in U.S. Tsy yields (a reminder that both the U.S. oil and Tsy markets are closed on Friday).
• The fundamental headwinds for the JPY are well documented, with central bank divergence (the BoJ continues to affirm its super dovish stance), yield differentials and Japan’s status as a notable net energy importer weighing on the JPY in recent weeks.
• The Japanese government remains vigilant when it comes to observing the FX markets, but it probably knows that the recent round of JPY weakness is fundamentally driven and hasn’t been very disorderly, which limits the impact of any verbal intervention.
• The cross has registered a fresh cycle high at Y126.36, with a Fibonacci projection (Y126.71) now providing the nearest point of technical resistance.
• Conditions are still notably overbought, but momentum remains with the bullish camp.
• The previously flagged PBoC matters headline the wider docket on Friday, with a lack of domestic Japanese risk events evident.