November 29, 2022

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USD/JPY extends gains to highest level since March last year

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USD/JPY pushes to fresh highs just above 111.50 currently

USD/JPY D1 01-07
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This is looking like a classic technical play as the break above 111.00 extends, with buyers pushing the pair to its best levels this year and highest since March 2020.

There is some resistance now from the highs back then around the region of 111.50-71 before the 112.00 level will pose a more imposing psychological resistance for buyers.

As much as I favour shorting the yen from a structural perspective, the view there is that it is one built on rate differentials and policy divergence.

While the Fed has made that abundantly clear in June, Treasury yields haven’t quite followed through with 10-year yields not doing much today either at 1.48%.

That remains the only caveat and concern I have with this latest push but again, it is tough to ignore the technical considerations as well.

For now, that break of 111.00 is providing all the momentum for buyers but to get a lift beyond 112.00, that may have to come with some agreement from the bond market.

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