Fundamentals remain a medium-term headwind for JPY - Scotiabank

Analysts at Scotiabank noted that JPY is had been up vs the USD and outperforming all of the G10 currencies with haven-driven strength resulting from geopolitical uncertainty following North Korea’s latest ballistic missile launch. 

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Key Quotes:

"The news weighed on the broader market tone throughout the Asian trading session and JPY’s overnight gain reached nearly 0.6%. However, fundamentals remain a medium-term headwind for JPY, given the outlook for relative central bank policy, as we note the continued widening in interest rate differentials. 

USD/JPY short-term technicals: bullish—momentum signals are bullish, DMI’s are confirming, and ADX trend strength is building. Short-term MA’s are bullishly aligned, and the 50 day MA appears poised to break back above the 100 day MA. Both are above the 200 day MA. There are no major resistance levels ahead of 114."