USD/JPY price action is neutral in the short run - Scotiabank

Strategists at Scotiabank note that USD/JPY short-term technicals look neutral and the spot market may continue to drift sideways in the near-term.

Key Quotes

“Japanese markets are closed today for a national holiday today. USDJPY is consolidating the 17% rise seen since early November. We think the JPY sell-off is looking stretched by a number of metrics but fundamental prospects—especially considering the likely widening in US-Japan interest rate spreads going forward—suggest the USD is likely to remain well supported on weakness.”

“USDJPY short-term technicals: neutral—price action is neutral in the short run. There are no obvious technical negatives to note and the spot market may continue to drift sideways in the near-term. We see resistance at 117.80 now and feel the neutral range could extend as low as 115.80 without doing any real damage to the USD’s near-term outlook.”