The Japanese Yen (JPY) is modestly stronger against the dollar, outperforming most G10 peers as Japanese bond yields pause their recent rise. With momentum neutral and services PMI offering only modest growth, USD/JPY remains confined to a broad 154.50-158 trading range, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/JPY remains range-bound between 154.50-158

"The yen is entering Wednesday’s NA session with a fractional 0.1% gain vs. the USD as it outperforms nearly all of the G10 currencies in overall quiet trade. Japan’s final services PMI offered little change from the preliminaries, printing 51.6 to offer a modest level of economic expansion."

"The selloff in Japanese government bonds looks to be taking a breather and yields are pausing their ascent – for now. The 2Y JGB yield looks to have found resistance around the psychologically important 1.20% level and the has apparently stalled above 2.10%. Tight spreads remain an important source of fundamental support for the JPY but remain completely disconnected to movement in spot."

"For USD/JPY, we continue to wait for a break of the range roughly bound between 154.50 and 158. Momentum is neutral, with an RSI hovering just above the 50 threshold."