USD/JPY: Major support at 135 may be about the limit of Yen gains in the near-term – Scotiabank

Wider yield spreads versus much of the rest of the world have left the Yen as the weakest major currency this year (down 5.5% versus the USD). Economists at Scotiabank analyze USD/JPY outlook.

Important technical reversal is perhaps developing around June peak at 145

The significant accumulation of speculative and hedge fund shorts and the JPY’s still relatively cheap valuation leaves the door open to short-term gains if yield spreads compress somewhat.

July price action so far suggests an important technical reversal is perhaps developing around the USD’s June peak at 145. Major, medium-term USD support sits at 135 which may be about the limit of JPY gains in the near-term, however. 

USD/JPY – Q3-23 135 Q4-23 135 Q1-24 130 Q2-24 130