USD/JPY sky falling? More speed bumps ahead? A range?

Feb 19 (Reuters) - The feeling in Tokyo is that the Japanese yen is headed higher over time but various factors suggest speed bumps on the way including U.S. tariff policies and a market increasingly long the currency.

The U.S. has yet to specify what sort of tariffs will be applied to Japan, and the market will likely remain on tenterhooks for more related news into April.

IMM CTA data shows net yen longs up to 54,615 contracts as of February 11 from 18,768 the previous week. Long positions are likely up even more this week with USD/JPY down to a fresh low of 151.23 Tuesday and the JPY crosses trading heavy too, after rallies the previous week.

That said, the USD/JPY ceiling has been moving gradually lower with the Bank of Japan remaining hawkish nL1N3P5037, nL2N3OO013 with more hikes in the offing this year nL2N3PA02T, nL3N3P906G. Higher JGB yields have also seen JGB-U.S. Treasury interest rate differentials narrower.

USD/JPY looks to be capped for now on the 152 handle, falling back after retracements up to 152.60 on February 17, 152.22 on the 18th and 152.31 in Asia Wednesday. Key near-term support is eyed in the 151.20-25 and 150.90-151.00 windows, and there is talk of good buying interest below, on the 150 handle.

Large option expirations above and below into month-end should help contain spot action for now too but the Tokyo bias looks to remain down with the Japanese economy looking to continue to grow, inflation remaining high and the BOJ remaining hawkish. Related comment nL1N3P401R.