USD/JPY is currently trading around 110.46, having broken through significant trendline support. Mazen Issa, Senior FX Strategist at TD Securities, believes the 10-year TIPS yield and the USDJPY are likely to recouple.
“Over the previous few days, the USD/JPY has not kept up with a dramatic drop in actual rate differentials. Over the previous year, this has been a reasonably solid association, indicating that downside risks are increasing.”
“The primary resistance zone on the upside is ahead of the 110.40 (+/-) level, while the first substantial objective on the downside is at 109.72.”
“We believe the market will begin to seek for a test of the cloud top (109.55) below 109.72, ahead of conventional support in the 109.20/30 zone.”/n
