Analysts at MUFG Bank point out that assuming US dollar sentiment improves more broadly, some USD/JPY recovery is feasible but they consider the current correction could be a sign of the beginning of the end of the trend higher that began at the start of last year.

“Yields do continue to grind higher in Japan with today the 5-year JGB yield hitting – 0.015%, the highest level since the BoJ implemented its negative policy in January 2016. But the move is likely more a reflection of front-end rates in the US grinding higher than any fundamental shift in view in Japan. It will though along with the Reuters article create greater focus on the BoJ meeting next week.”

“The failure to test the 117.00 level is a clear bearish signal for USD/JPY. We had assumed dollar positive momentum would get us there before JPY recovery took hold. That failure and the fact that the market was short JPY means the prospect of a quick rebound is diminishing. We have long argued the case for a correction and it seems that has unfolded a little sooner than expected.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Read More