Yen Up 3% This Week, USD/JPY Corrective Cycle In Focus, Local Markets Out Today

From highs near 156.30, recorded early in Thursday Asia Pac trade, it was mostly one-way traffic to the downside for the rest of the session. By late NY trade we were back close to 153.00. We sit slightly higher in early Friday dealings, last around 153.55. Yen rose just over 0.60% for Thursday's session, although the peak to trough move (from near 156.30 to 153.00) was a +2% yen gain.

• Focus remains on the level of suspected intervention that has taken place so far this week. BoJ account data suggests net USD selling of roughly $60 billion, a similar amount to that deployed in 2022 to support the local currency. At this stage, yen is up around 3% over the past week versus the USD.
• This week’s volatile trading highlights the start of a possible corrective cycle in the pair and yesterday’s sharp sell-off reinforces this theme. The pair has traded through support at the 20-day EMA - at 154.58 - exposing the 50-day EMA at 152.39, a key support. Note that trendline support drawn from the Dec 28 low, lies at 151.05.
• Further yen support came amid lower US yields, as the dovish Fed lean from the May policy meeting, outweighed firmer unit labor cost data.
• It is a local holiday in Japan today (and on Monday), although markets will remain focused on further intervention risks, given the tendency for the past week's intervention to happen at illiquid times (see this link for more details).
• Finally, in the option expiry space, note the following for NY cut later: Y154.00-20($1.3bln), Y155.00-10($726mln), Y156.50-70($989mln).