USD/JPY is moving higher again. Despite rising official concerns, analysts at BBH look for further yen weakness as it should eventually test last week’s high near 125.10.

Japan officials are getting more concerned about the weak yen

“Japan officials are getting more concerned about the weak yen. This time, it was Keiichi Ishii, Secretary General of junior coalition partner Komeito who said the Bank of Japan should pay close attention to exchange rates as a by-product of its ultra-loose policies.”

“For now, the BoJ won the battle to maintain Yield Curve Control. The 10-year yield is trading near 0.21%, below the 0.25% limit under YCC. However, the struggle to contain JGB yields is by no means over, not when bond yields in the rest of the world continue to march higher. The direction for USD/JPY pair remains clear with central bank divergence particularly strong here.”  

“A break above 123.65 is needed to set up a test of the March 28 high near 125.10. After that is the June 2015 high near 125.85.”