EURJPY TECHS: Trendline Support Remains Exposed

• RES 4: 152.81 1.50 proj of the Mar 20 - 21 - Apr 6 price swing
• RES 3: 152.00 1.382 proj of the Mar 20 - 21 - Apr 6 price swing
• RES 2: 151.61 High May 2 and the bull trigger
• RES 1: 151.14 High Jun 13
• PRICE: 151.07 @ 16:08 BST Jun 13
• SUP 1: 149.46/148.59 20-day EMA / Low May 31
• SUP 2: 148.10 50-day EMA
• SUP 3: 147.61 Low May 16
• SUP 4: 146.67 2.0% 10-dma envelope

The broader theme in EURJPY remains bullish and the cross continues to climb, extending recent gains. Price has now traded solidly above resistance at 150.20, the Jun 5 high, as well as 151.07, May 29 high. Key resistance is at 151.61, the May 2 high and also represents an important bull trigger. Clearance here opens the best levels since 2008. On the downside, key short-term support is at the 50-day EMA, which intersects at 148.10. A break would highlight a possible reversal.

• In line with the sharp reversal for US yields following the US inflation data and the continued pressure on the UK front-end, the Japanese Yen is the poorest performing currency in G10 on Tuesday with GBPJPY rising as much as 1.15% as we approach the APAC crossover.
• USDJPY has bounced around 125 pips from the earlier 139.01 lows, reinforcing the bullish technical trend conditions. Attention is on key resistance at the top of a bull channel drawn from the Jan 16 low. The line intersects at 141.30 today. A clear break of this hurdle would reinforce a bullish theme and open 141.61, the Nov 23 2022 high.
• Interestingly, GBPJPY has extended its move back above 175 and looks set to close at its best level since late 2015.
• Worth noting that the Bank of Japan meeting/decision is this Friday. Earlier MNI reported that there is no prospect that the Bank of Japan will scrap yield curve control this year, because even if policymakers become confident of a virtuous cycle between wage hikes and price rises they would still want to avoid any sharp rise in interest rates, MNI understands.
• Whilst it is possible that the BOJ could adjust the parameters of its yield curve policy, perhaps by modifying the zero percent target rate at the centre of its -0.5% to 0.5% tolerance band for the 10-year bond, this would only be to mitigate unwanted bond market distortions.

• A clearance of key support for TYU3 at 112-29+ (trading at 112-22+ and next eyeing 112-16) appears to have let the rest of the yield curve shunt higher.
• Front end to belly yields are currently up~12bps despite most recently pulling back off fresh highs since Mar 10, in sizeable cheapening pressure ahead of the tomorrow’s FOMC decision.
• The increase in front end yields see Tsys underperform core EU FI (5-6bps higher on the day) but still significantly outperform Gilts (+26bps) at the earlier cash close after strong labour data have sent BoE rate expectations surging.
• FOMC-dated OIS doesn’t shake off the post-CPI hit for near-term meetings with just +2bps for tomorrow and a cumulative +17bps for July (-5bps since the data) but the Dec’23 has continued to increase to 5.14% for +7bps on the day and just 14bp of cuts from the 5.28% terminal now seen in September.

Source: Bloomberg