BUZZ-COMMENT-USD/JPY dip-buyers tested by tariff speculation
A series of hourly hammers since the breakout high of 157.80 on Dec. 19 suggests USD/JPY sentiment remains bullish, though market participants appear hesitant to push much higher due to uncertainty about BOJ policy, the incoming Trump administration's economic agenda, and potential near 160.
BOJ Governor Kazuo Ueda said the central bank would raise its policy rate if the economy shows improvement but that risks could affect the timing of tightening. One of these risks, the tariff policy of the incoming Trump administration, became evident on Monday.
USD/JPY fluctuated from a high of 157.95 to a low of 156.25 after the Washington Post reported Trump’s aides were considering tariffs on only essential imports. This decline was almost fully reversed after President-elect Donald Trump denied the report, highlighting the preference for dip-buying USD/JPY.
A move above the December high of 158.09 could trigger further upward momentum. Rising U.S. Treasury 10-year yields and higher oil prices provided support, although trading volumes remain insufficient to signal an imminent breakout and systems have been yen buyers on Monday.
Trading dynamics may change later in the week after more economic data comes in. The BOJ’s quarterly regional economic report is due on Thursday, and the U.S. jobs report is scheduled for Friday. Risk reversals have shifted against the yen ahead of the reports, putting that 158.09 level in play.
For more click on FXBUZ
(Robert Fullem is a Reuters market analyst. The views expressed are his own.)
((robert.fullem@thomsonreuters.com;))
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