USD/JPY lower again, range break down soon?
Nov 25 (Reuters) -USD/JPY rallied to 156.76 on Nov 15 on an extensionof the so-called Trump trade and resulting pop in U.S. interest rates. WhileU.S. yields remain firmwith the Federal Reservenow likely to pause after a December rate cut, there are indications USD/JPY could break below the 153.28-156.76 range seen since mid-November.
Bank of Japan GovernorKazuo Ueda hassounded hawkish again in recent speaking engagements nL1N3MS06V, nP8N3LJ0AY, nL1N3MP019, nL1N3MS05S and the market is gearing up for another quarter-pointtarget rate hike on Dec19 nL4N3MJ0L0.
Incoming U.S. President Donald Trump'snomination of Scott Bessent asTreasury Secretary has also brightened the market move nL1N3MT0ZL, nL1N3MT10B. Bessentknows the markets intimately, and maybe less "hawkish" than other Trump appointees on trade tariffs nL3N3MV043.
Treasury yieldsremain firm for now but, with the appointment of Bessent, could becapped near or below recent highs. Two-yearnotes look to have peaked just ahead of 4.40% and the 10-yearat 4.505% on Nov15. Some players suggest U.S. rates could fall back more.
A USD/JPY break below the 153.28 Nov19 low wouldsee a test of 153.00 and the now flat Ichimoku kijun line at 152.92. These levels are followed by recent daily lows at 152.62 on Nov 11 and 152.14 on Nov 8. Below 152.00, next support comes in at 151.30, the Nov 6 low.
Given talk of massive option positions at the 150.00 strike in December including possible barriers, speculators'focus may shift towards this level. Related comment nL1N3MQ021.
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USD/JPY: https://tmsnrt.rs/4fTniSC
Haruya Ida is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai
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