JPM G10 FX Spot Desk: USDJPY

USDJPY chopping around on the 150 handle here in directionless trading, feels like we are coiling for a strong test of the well defined resistance levels above but in fairness we are not seeing much instruction from US fixed income or stocks even on the announcement of broad 25% auto tariffs. Japan is quite high up on the pain list for US auto tariff here and the argument that the currency may react to the economic ramifications is now stronger than they have been for a long time given the fact that the BoJ is normalizing and domestic data matters but I still would not put too much weight in it – the inflation/growth concern mix will dictate direction. SHF had another strong day of JPY selling (2z) and now but for context JPY length is only around 15% down from the YTD max for this sector so hard to say we are back to being fully comfortable about prevailing positioning despite a thorough cleansing in the DHF options department. So sticking with modest core short stance in USDJPY here for now, resistance at 151.00/30 is well defined while the 50d and 200d sit at 151.46 and 151.665 respectively today the cloud continues to fall and will be on the 151 handle next week. US Q4 GDP data today alongside IJC.

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