COMMENT-USD/JPY bears flex as rallies remain shallow

The path of least resistance remains skewed to the downside for USD/JPY. Rebounds have been shallow, evidenced by the fleeting move above 145, which is also indicative of a preference to fade rallies, and with little in the way of notable support besides the round numbers at 143.50 and 144, a move to the Aug. 5 low (141.70) is still on the cards.

That said, it is worth noting that Wednesday marks corporate month-end, which often coincides with a bid in the dollar. While this may provide a reprieve for USD/JPY, traders are likely to lean against rallies in the pair.

Looking ahead, Bank of Japan Deputy Governor, Ryozo Himino will be speaking with local leaders at 2130EDT, which will be of interest in light of Governor Ueda recently sticking to his hawkish script. Recall that with a Reuters poll showing 57% of economists projecting one more BoJ hike by year-end, there is clearly room for a surprise when looking at market pricing, which has under 7bps of tightening by year-end (0#BOJWATCH).

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