Economists at Credit Suisse believe this first phase of JPY weakness has now come to a temporary end. Therefore, USD/JPY is expected to break support at 126.95 to mark a top for a fall to support next at 125.10.

A temporary phase of JPY strength

“With 10yr US bond yields rejecting major support at 3.21/3.26%, we look for 131.25/132.20 to cap for now for a correction/consolidation phase.”

“Support is seen at 126.95, beneath which should see a fall back to price support at 125.10. With the 23.6% retracement of the 2021/2022 rally seen not far below at 124.56 and with the strongly rising 55-day average also seen not far below here, we then look for a floor in this 125.10/124.56 zone. We would then look for a consolidation phase to develop ahead of an eventual move back to 132.20.”