USD/JPY: increasing sensitivity to broader market sentiment - Scotiabank

Analysts at Scotiabank USD/JPY has faded the bulk of its rally from Monday’s one month low.

Key Quotes:

"We continue to highlight JPY’s sensitivity to broader market sentiment and note its vulnerability to knee jerk gains in periods of risk aversion and its tendency to weaken moderately in periods of risk appetite. Short-term risk reversals suggest a slight moderation in the premium for protection against JPY strength."

"Technical signals are all moderately bearish and risks appear balanced to the downside following Tuesday’s failure to sustain the break above 107.80. We await a resolution of the three session range and look to 106.50 support and 107.80 resistance."