USD/JPY up big
This is an impressive and confusing week for USD/JPY. The pair is up on the week and up big today, rallying 270 pips to 107.32. There was talk late yesterday of Japanese investors switching into Treasuries as yields stabilize and rise. The US 10-year close to 1% is a bit more alluring than elsewhere, even if it’s driven by a coming wave of issuance. I also don’t rule out funding demand and intervention — although the volumes needed right now would be stratospheric.
In any case, technicals are the key to managing risk at a time like this. The big level to watch is the 61.8% retracement of the drop at 108.01 (all it 108.00).