USD/JPY scope to rally towards 106 near-term  - Scotiabank

Strategists at Scotiabank note that USD/JPY maintains a neutral to bullish perspective and that the USD has scope to rally towards 106 near-term and 108+ potentially in the next few weeks.

Key Quotes

“Rising US long-term yield continue to support USDJPY. Spot has eaten through Japanese exporter selling interest in the low/mid 104s to trade up to a three month high this week, reflecting Fed tightening expectations. Month end flows may curb that market’s enthusiasm somewhat. Japan releases unemployment and CPI data tonight.”

“USDJPY short-term technicals: neutral/bullish—USDJPY still looks technically positive on the daily chart even though the market has stalled somewhat below the early week high. Daily “cloud” chart trends are bullish, with the USD rising through resistance and benefiting from bullish moving average signals “confirming” the break out. We think the USD has scope to rally towards 106 near-term and 108+ potentially in the next few weeks.”