USD/JPY needs to break above 109.50/70 to see further gains – OCBC

The FOMC minutes spooked USD shorts into taking profits. The USD reversed losses against fellow reserve currencies, such as JPY. USD/JPY is back above 109.00 and Terence Wu, FX Strategist at OCBC Bank, expects the pair to increase bullish pressure on a break above the 109.50/70 area.

USD/JPY turns more positive

“Sharp turnarounds in Fed expectations and risk sentiment caused a choppy session for the USD-JPY, with the pair eventually ending higher above the 109.00 mark.” 

“Higher back-end UST yields should exert a more sustained pull compared to risk aversion, allowing the pair to avert immediate downside pressure. Nevertheless, stronger upside bias may only present itself should the pair overcome 109.50/70.”