After that rebound from April low, USDJPY pulled back nicely into channel support around the 159 area, where the market is now trying to stabilize once again. The BoJ did not convince markets with a hawkish stance, as they again emphasized that they need more time before making any firm decisions, which is why we are seeing this rebound. From a wave perspective, it still looks like another leg higher is coming, with a move beyond 160.46 and possibly toward 161 or higher.
However, once those levels are reached, we should be more careful, as the BoJ could step in if yen weakness becomes too strong, especially with rising energy prices adding to inflation pressure in Japan.
Higher US yeilds can also put some more fuel of fire, for USDJPY to stay supported.
GH
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