USD/JPY no major resistances until 120 - Scotiabank

Eric Theoret, Strategist at Scotiabank noted that USD/JPY technicals look bullish, with no major resistances between  recent congestion (mid-116s to mid-118s) and 120.

Key Quotes

“JPY is weak, underperforming all of the G10 currencies with a 0.9% decline from Monday’s close. Policymakers at the BoJ made no changes to their ‘QQE with Yield Curve Control’ as they upgraded their outlook to one of ‘moderate expansion’. Comments from Gov. Kuroda were positive in terms of both the economic outlook and his assessment of policy effectiveness. FX related comments attempted to shift the narrative to one of USD strength rather than JPY weakness as he suggested that the yen was not at a ‘surprising level’.”

“Yield spreads are once again widening in a JPY-negative manner, and short-term measures of implied volatility are softening and eroding the modest premium for protection against JPY strength.”

“USDJPY short-term technicals: bullish—momentum signals are bullish, DMI’s are providing confirmation, and both short– and medium-term MA’s are aligned in a bullish manner. Recent support has been observed at the 9 day MA (116.41). The 21 day MA (114.57) has not been breached since early November. There are no major resistance levels between recent congestion (mid-116s to mid-118s) and 120.”