USD/JPY: Neutral bias - Westpac

Sean Callow, Research Analyst at Westpac, explains that the FOMC meeting punctured another attempted rally by USD/JPY, but no major support levels have been broken, with the March range of 105.25 – 107.29 intact. 

Key Quotes

“Helping USD/JPY’s cause is the apparent completion of the unwind in spec longs. At least among leveraged funds on CME, positions were effectively flat as of 13 Mar.”

“This at least helps USD/JPY stabilize but doesn’t provide actual fuel for a sustained rally. Neither does the dollar mood. But the post-FOMC pullback is minor compared to Jan-Feb price action and it looks as though 105 is still strong psychological support.”

“So, we retain a neutral bias for the week ahead, with a test of 105.00/25 only likely if risk aversion really takes hold. Risk appetite might actually hold up OK if the Fed is indeed cautious about 2018 tightening despite faster growth.”