• USD/JPY remained in familiar place as gains were capped by the ongoing threat of Japanese FX intervention.
• Meanwhile, wide short-end yield differentials between Japanese and U.S. bonds favored the dollar, though narrower long-end spreads limited upside momentum.
• On the policy front, investors remain divided over whether the Bank of Japan will deliver another interest rate hike this month, as policymakers weigh growing uncertainties linked to tensions in the Middle East.
• Former BoJ Deputy Governor Masazumi Wakatabe said it is important to assess whether Japan’s economy can withstand tighter monetary policy.
• The BoJ’s April Summary of Opinions showed most policymakers favored a near-term rate hike while highlighting inflation risks.
• Immediate resistance is located at 158.62(May 28th high), any close above will push the pair towards 160.00(Psychological level).
• Support is seen at 158.97 (38.2%fib) and break below could take the pair towards 158.45(SMA 20).
Recommendation: Good to buy around 159.30, with stop loss of 158.50 and target price of 159.90
