USD/JPY and JPY crosses rose again overnight on the back of dissipating concerns over risk assets, including carry trades. Stock markets around the world recovered, taking their cues from the bounce in the Nikkei. Some emerging markets including India saw their stock indices up as much as 2.27%.
USD/JPY traded up to as high as 116.74 in New York overnight. It has added on to these gains this morning, trading up to the 116.85/90 level. Although some offers are eyed ahead of 117.00, further tests up are eyed. The talk is some Japanese exporters may be waiting for moves up to the 117 handle. This is likely but Japanese exporters are mixed as to what to do currently, with may of the more sophisticated operations well-hedged to end-June and some partially hedged out to as far out as end-September, and there seems to be no urgency to sell this rally.
With crosses still mostly bid and supportive, it may take only another rally in the Nikkei for USD/JPY to break higher. Topside resistance above 117.00 is eyed 117.46, where the 200-day moving average comes in. This level may be harder to pierce. Support below is seen at 116.20, the New York low, if not ahead. USD/JPY currently trades 116.72/77, off a touch from early highs.
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