The yen has struggled to maintain any sustainable period of strength even after the BoJ removed prior barriers to rising bond yields, which typically results in currency appreciation. Adding to the prior lack of impetus, the BoJ Governor Ueda failed to detail when the BoJ may pivot from its ultra-loose policy but has spoken at length about the prospect of withdrawing from negative interest rates should incoming inflation and wage growth data provide a compelling case for it.
It appears the weak dollar is helping mark lower USD/JPY levels but the yen is seen picking up strength across a number of major currency pairs. The net effect is softer USD/JPY as the pair has traded below the 50-day simple moving average (SMA) - which had acted as dynamic support until now. With lower energy prices and a firmer yen, talk about FX intervention is likely to subside.
USD/JPY finds support at 146.50, followed by 145.00 . The 50 SMA now forms a potential dynamic resistance if we are to see a pullback, but the bearish move has not breached oversold conditions on the RSI yet so there may still be more room to run before overheating.
Credit: (Dailyfx)