USD/JPY maintains a neutral tone - Scotiabank

According to Eric Theoret, Strategist at Scotiabank, USD/JPY maintains a neutral tone, as technical signals are conflicting.

Key Quotes

“JPY is underperforming with a decline of 0.8% and pressure driven by the broader tone of risk appetite in an environment of broad-based USD strength. Domestic developments have been limited.”

“The U.S.-Japan 2Y yield spread is widening in a JPY-negative manner and measures of sentiment are compounding the impact as risk reversals fade the recent rise in the premium for protection against JPY strength. There are no major domestic releases scheduled through the end of the week, leaving the focus squarely centered on the broader market tone.”

“USDJPY short-term technicals: neutral—USDJPY is once again attempting a break of the 50 day MA, a level of resistance that has served to restrain USD/JPY gains on a YTD basis. Signals are conflicted and USD/JPY is threatening the descending trendline off the highs from late May.”