USD/JPY may lose a little altitude near-term below 115.60 - Scotiabank

USD/JPY technical picture looks bullish, according to Scotiabank analysts. They noted that a sustained break through the 116 area should see more follow through towards 119/120.

Key Quotes

“US/Japan longer-term rate spreads remain influential on USDJPY; with US 10 year yields reaching 2.5% and rates likely to move higher still, the market has boosted USDJPY through 115 to the highest spot level since February.”

“Friday’s IMM data confirmed a significant shift in speculative positioning and sentiment to JPY bearish. The net speculative short yen position revealed in the data was the largest in a year; the Fed policy decision and the outlook for rates moving into 2017 will be key in sustaining bearish sentiment.”

“USDJPY short-term technicals: bullish—USDJPY looks toppish on the short-term (hourly) chart and may lose a little altitude nearterm below 115.60 hourly trend support. We think the low 115 area should remain well-supported, however. A sustained break through the 116 area should see more follow through towards 119/120.”