The firm argues that upside in the pair may be limited after a push higher in early Asian trading
The pair got an early nudge up from 105.80 levels to a high of 106.43 before retreating back to near unchanged levels currently:
On the move, Credit Agricole's FX department in Tokyo says that there was some buying back of USD/JPY amid the news that 7-Eleven was going to be buying Speedway.
But the firm says that if the buying was mostly related to short-covering as well, then the pair may have hit the day's peak already today. Adding that the push towards 106.00 on Friday owed to verbal intervention from Japanese officials and month-end flows.
Drilling down to the near-term chart:
The pair is running into some resistance from the 38.2 retracement level of the swing move earlier since peaking on 5 June @ 109.85; around 106.35.
But buyers are still keeping near-term control as they are holding above the 200-hour MA (blue line) @ 105.75 in trading today. That will be the key line in the sand to watch as a break under there will see sellers regain more near-term control.
In the bigger picture, Treasury yields remain a key spot to watch for the pair and with the Fed giving the green light last week, the path of least resistance is likely for a continued push lower down the road.
Especially more so if bond traders can get used to 10-year yields under the April lower-bound at around 0.539%. A push towards the 9 March lows will be a tailwind for USD/JPY sellers and the worsening virus situation in Japan also adds to that.