Yen Woes Continue

Participants continued to shed the yen Wednesday, which sent USD/JPY to new cycle highs. The pair's RSI moved even deeper into overbought territory as a long-term downtrend drawn off the 2002 high came under pressure. USD/JPY managed to eke out some gains even as U.S. Tsy yields faltered after Asia hours.

• On that front, note that our policy team recently flagged its understanding that “the Bank of Japan is increasingly uncomfortable with the weakening yen, but its options for addressing the depreciation of the currency are narrowing as downside risks to the economy grow, leaving it to rely on verbal intervention in concert with the Ministry of Finance” (click for full story).
• USD/JPY last sits at Y121.11, just shy of neutral levels. A break above trendline resistance/yesterday's high at Y121.21/41 would bring Jan 29, 2016 high of Y121.69 into view. Bears look for a pullback below the Y120.00 round figure.
• Expansion in Japan's manufacturing sector accelerated in March, while contraction in services moderated a tad, according to the preliminary results of Jibun Bank survey.
• Focus turns to Tokyo CPI, due for release tomorrow. In addition, the usual dovish dissenter among BoJ policymakers Kataoka will speak later today.