USD/JPY ranging, with focus on Japan’s CPI and Yellen - Scotiabank

Japan’s CPI to be released during the Asian session might provide some movement for USD/JPY, however the near-term risk appears squarely centered on Fed Chair Yellen’s speech and its impact on the broader market tone, said Eric Theoret, Strategist at Scotiabank.

Key Quotes

“JPY is flat, bound within its remarkably tight two week range. Domestic developments have been limited, with no fundamental releases or comments from either officials or policymakers. The 7:30pm ET CPI release may provide for some movement, however the near-term risk appears squarely centered on Fed Chair Yellen’s speech and its impact on the broader market tone.”

“JPY’s risk profile leaves it vulnerable to strength in periods of risk aversion and we highlight the potential for knee-jerk gains. Officials and policymakers will be keen to mitigate any sentiment driven moves, leaving JPY equally vulnerable to headline risk and verbal intervention.”

“USDJPY short-term technicals: bearish—momentum signals are modestly bearish and the bearish ADX is holding just above the trend-confirming threshold at 25. Moving averages are bearishly aligned across a range of time horizons and we look to a downside break of the recent consolidation within the August 16 range 99.54 to 101.29, with risk to the June 24 low around 99.”