The Asian equity extends its gains, with the Nikkei 225 trading at the moment +0,41% at 16.646, on the back of the risk-on market sentiment which brings up also the USD/JPY pair, trading at the time of writing close to the 109 level.
The Nikkei upward pressure has been particularly favored by Energy and Mining stocks and after the overnight wally of gold, copper and iron-ore. The movement however continue to be capped by the recent difficulties of Wall Street which is weighing on the investors sentiment.
The currency pair rebound, on the other hand ,seems to try to cancel yesterday’s losses, with the increasing risk-on sentiment which is favoring mainly the US Dollar, notoriously riskier than the Japanese cpty. A Yen that seems to be unconcerned about good trade balance data revealed overnight while the market seems to consider exclusively this afternoon US events such as Jobless Claims and the speech of a few Fed’s spokesman.
Following the former Japanese MoF Takatoshi Ito, the BOJ is about to intervene on the market easing his monetary policy in June/July in relation to Q1 GDP data and G7 summit decisions. For sure an essential element in order to intervene on the FX market for the BOJ will be the Yen price, which could be too far from the Bank’s target level.
In terms of technical analysis, one of the hardest level to break will be 109, after which the cross could go to the 109,50 level (higher level after the recent BOJ conference). In case the pari will revert his movement, a good level in order to favor a rebound could be 108,46 (5-DMA).