USD/JPY bearish tone prevails - Scotiabank

USD/JPY has yet to break out of the August 16 99.54-101.26 range, however its broader signals are bearishly aligned said Eric Theoret, Strategist at Scotiabank.

Key quotes

“JPY is trading in a remarkably tight range just above Monday’s close, its movement relatively limited in the absence of both fundamental releases and headline risk from officials’ comments. JPY risk remains conflicted as we note the offsetting influence of bearish fundamentals and widening yield spreads, as measures of sentiment suggest a greater desire for protection against JPY strength.”

“There are no domestic releases ahead of Friday’s CPI, leaving the focus squarely centered on broader developments, the shifting Fed view, and its impact on the market tone.”

“USDJPY short-term technicals: bearish—USDJPY has yet to break out of the August 16 99.54-101.26 range however its broader signals are bearishly aligned across trend and momentum indicators. Near-term resistance has been observed above the 9 day MA (100.63) and we look to weakness toward the August 16 low 99.54 followed by the late June low around 99.”