USD/JPY to pause around current levels - Westpac

Robert Rennie, Research Analyst at Westpac, points out that they shifted to a more bullish stance on USD/JPY last week, noting the ‘head and shoulders’ based technical objective that came in close to 110.80, but the speed of the move has been slightly surprising.

Key Quotes

“USD/JPY has fully retraced 50% of the sell off from 114.73 in November to 104.56 in March and it would appear logical that we pause around current levels.”

“It remains to be seen how FX markets interpret the use of “symmetric” in the FOMC statement. It certainly could suggest that the Fed will not be in a rush to bring forward rate hikes, thus crimping recent US$ strength – though as Rich notes on p3, positioning is still struggling to keep pace with the velocity of the move. We err on the side of caution at 110.”