Yen Weakens As USD Strengthens, Focus On Next Week’s BoJ

The G10 fell against the US dollar on Monday as risk sentiment deteriorated (USD index +0.2%) and European equities sold off (US was closed). Within the G10 the yen was one of the worst performers with only NZD and NOK weakening more against the greenback. USDJPY rose 0.6% to 145.75, close to the intraday high of 145.94, and has started Tuesday around 145.80.

• USDJPY’s rise yesterday has put the pair within range of some sizeable option expiries rolling over later this week, with over $4bn notional to roll off between Y145.70-00 across Tuesday-Friday NY cuts.
• The recent move higher in USDJPY has opened the potential for a continuation of the bull cycle. Key short-term support is at 143.42 while initial resistance is at 146.59.
• EURJPY rose 0.6% on Monday and reached a high of 159.83 and is now around 159.65. The recent rally in EURJPY has strengthened the short-term bullish theme. Key short-term support is at 157.21 with initial resistance at 160.18.
• AUDJPY is 0.2% higher at 97.08 and spent the post-APAC session range trading. It has started today slightly lower at around 97.04 on the back of a weaker Aussie.
• Today December PPI data prints and is expected to be flat on the month but decline 0.3% y/y after +0.3% y/y the previous month. The upcoming BoJ decision on January 23 is likely to be the focus of markets.