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Yen Edges Lower Again After Overbought Conditions Get Unwound

JPY

Wednesday brought an extension to the pullback in USD/JPY from its multi-year highs printed at the start to the week. Asia-Pac hours saw the U.S./Japan 10-Year yield differential edge further away from recent wides, fuelling yen purchases as overbought technical conditions in USD/JPY got unwound (its RSI is back below the 70 "overbought" threshold).

  • BoJ Gov Kuroda met with PM Kishida after the central bank took steps to enforce its official cap on 10-Year JGB yield. Kuroda noted that "each market operation doesn't directly affect foreign exchange rates," playing down the worry that stepped-up bond buying could play into recent currency weakness.
  • USD/JPY has added 12 pips and last trades at Y121.95. Bulls need a break above Mar 28 high of Y125.09 to regain the upper hand. Bears look for a slide through Mar 24 low of Y120.95 before taking aim at round number support at Y120.00.
  • Flash Japanese industrial output will hit the wires later today, with quarterly Tankan Survey & final Jibun Bank M'fing PMI coming up Friday.

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