USD/JPY may see some near-term consolidation - Scotiabank

Eric Theoret, Strategist at Scotiabank, noted that the outlook for relative central bank policy remains dominant for USD/JPY while the technical perspective remains bullish, with caution.

Key Quotes

“JPY is underperforming with a decline of 0.4%, testing fresh lows at levels last seen in March, pressured by local market participants’ return following Wednesday’s holiday. The outlook for relative central bank policy remains dominant and measures of sentiment suggest a remarkable erosion in demand for protection against JPY strength.”

“USDJPY short-term technicals: bullish, with caution—momentum signals are well into overbought territory and the RSI is at 84, opening up the risk of exhaustion. USDJPY has tested the 50% retracement of the June 2015-June 2016 decline and may see some near-term consolidation.”