USD/JPY: Break of support at 149.55 to unlock a drop back to the 148.00 area – Scotiabank

The Japanese Yen (JPY) is the best performing major after the Bank of Japan (BoJ) board member Hajime Takata sent a strong signal for ending the negative interest rate policy. Economists at Scotiabank analyze USD/JPY outlook.

Spring start to monetary tightening from the BoJ to bolster prospects of a Q2 rally in the JPY

JPY outperforms following comments from BoJ Governor Takata. He commented that the central bank’s price target was ‘finally coming into sight’, suggesting the BoJ may be closer to a rate hike. 

USD/JPY is still some way from technical support at 149.55 that could unlock a drop back to the 148.00 area but the prospect of a spring start to a mild round of monetary tightening from the BoJ would bolster prospects of a Q2 rally in the JPY, in line with seasonal patterns.