USDJPY TECHS: Bear Threat Still Present

• RES 4: 150.49 High Apr 2  
• RES 3: 149.28 High Apr 3
• RES 2: 148.65 High May 12 and a key resistance
• RES 1: 144.99/145.68 High May 28 / 50-day EMA
• PRICE: 144.98 @ 16:20 BST May 28
• SUP 1: 142.12 Low May 27
• SUP 2: 141.96 76.4% retracement of the Apr 22 - May 12 bull leg
• SUP 3: 139.89 Low Apr 22 and a bear trigger
• SUP 4: 138.82 1.50 proj of the Feb 12 - Mar 11 - 28 price swing 

Despite yesterday’s strong bounce, a downtrend in USDJPY remains intact and short-term gains are considered corrective. Support at 142.36, the May 6 low, has been pierced. A clear break of it would open 139.89, the Apr 22 low and the next key support. On the upside, key short-term resistance has been defined at 148.65, the May 12 high. Initial firm resistance to watch is 145.68, the 50-day EMA.  

The NY Fed announces that (as has been the case for the last couple of month- / quarter- ends) that it will run a daily morning overnight Standing Repo Facility (SRF) operation (0815-0830ET) starting Jun 26, in addition to the usual afternoon SRF ops (1330-1345ET). Announcement here.

• What is unusual is that there is now no end-date to these operations - this announcement confirms what NY Fed SOMA manager Perli said last week, along with the reasoning:
• "The SRF is an important facility, but it is not frictionless. Our SRF counterparties have mentioned some features of the SRF that discourage its usage even if market rates exceed its minimum bid rate. One such friction is the fact that SRF auctions are carried out and settled in the afternoon, while most repo market activity takes place in the morning. Afternoon auctions are important because they can provide cash later in the day should a need for liquidity arise when most repo market activity has already taken place. Still, that does not mean additional earlier SRF auctions cannot be helpful....in the not-too-distant future the Desk will start implementing daily morning SRF operations that will also be settled in the morning. This will be an important step in enhancing the efficacy of the facility, and, at the margin, it can contribute to a smaller SOMA portfolio than would otherwise have been the case."
• Daily aggregate size for the combined operations is $500B.
• On the margins this should be helpful for market functioning at times of distress, but given such limited takeup of the morning SRF in the last couple of quarter-end windows, and the fact that the NY Fed telegraphed this decision previously, there shouldn't be much of a market reaction.

• MNI: FED SHOULD TAKE CAUTIOUS APPROACH - MAY MINUTES
• FED: WELL POSITIONED TO WAIT FOR MORE CLARITY ON OUTLOOK
• FED: TARIFFS BOOST RISKS TO INFLATION, EMPLOYMENT