USD/JPY may have reached a top ahead of BOJ - Amplifying Global FX Capital

Greg Gibbs, Director, Amplifying Global FX Capital, notes that USD/JPY may have reached a top in the market ahead of the BoJ meeting on 29 July, adding that much depends on the BoJ monetary policy meeting on 29 July.

Key Quotes

The USD/JPY fell sharply on Thursday after a rapid further extension of its rally on Wednesday.  The fall was blamed on an interview by BoJ Governor Kuroda dismissing the possibility of helicopter money policy, although the run up to a peak of 107.5 early in Asian trading on Thursday (from around 106.1 a day earlier) and retreat so far to a low of around 105.5 in the hours after the Kuroda comments, may be something of a blow-off top after a stop-loss run.

The surge to 107.50 from around 100 in less than two weeks since the Abe/LDP decisive election win in upper house elections may have placed a top in the market ahead of the BoJ meeting on 29 July.  So far USD/JPY has retreated to the mid-105s which is a key support region for the JPY (the low that preceded the previous BoJ policy meeting on 16 June).

The surge from around 100 is the biggest recovery so far in the downtrend this year and has been accompanied by a significant improvement in sentiment for USD/JPY.  However it might be regarded as still in a down-trend and much will depend on its capacity to consolidate its recent gains in coming weeks.