USD/JPY broke 114 yesterday and extended its gain to 114.83 with executing some weak stop-losses.
Nikkei opened gapping higher following an overnight USD/JPY’s rally before it eased some gains, USD/JPY eventually lost its momentum with lower stocks and retraced back to 114 in Tokyo. Flow-wise, interestingly we were relatively calm on this rally, people had closed some long exposures already as a big USD selling was expected at the month end, we didn’t see not so many sellers from both fast monies and local corporates.
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In terms of trading, as I noted market position is lighter after some consolidations between 112/113 while higher oil price provided by OPEC’s output cut agreement yesterday is likely to give another support to USD/JPY as there will be upside pressures on yields and USD/JPY is the most sensitive currency pair to a yields differential. I still like long USD/JPY from here, intraday support 113.30/50 resistance 115.
