Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the Japanese Yen (JPY) has gained over 0.7% versus the US Dollar (USD) but still lags other G10 currencies as risk sentiment improves on the ceasefire. They stress the positive impact of lower Oil prices on Japan’s terms of trade and stronger labor cash earnings, and for USD/JPY they target a retracement toward the 50-day moving average above 157 and the mid-155s gap.

Lower Oil and data back Yen strength

"The JPY is up over 0.7% vs. the USD but a relative underperformer against most of the G10 currencies in an environment of broad-based USD weakness."

"The focus is on sentiment, and relief over the short-term reprieve in the US/Iran conflict."

"These developments carry material implications for Japan’s terms of trade, given the near-$20/bbl decline in crude prices observed on the day."

"Fundamentally, Japan’s labor cash earnings data came in stronger than expected, delivering added support for a continued progression toward BoJ tightening."

"For USD/JPY, we await a more meaningful retracement of the late Jan/March rally and target the 50 day MA just above 157 as well as the January ‘intervention’ gap in the mid-155s."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)