Research Team at BBH, notes that the Japanese yen is recovering from two-day two percent decline as the yen is the strongest of the majors today, rising about 0.6%.

Key Quotes

“The greenback initially extended its gains marginally in early Tokyo before the selling pressure emerged. The price action reinforces the importance of the JPY109.50 resistance area. The Nikkei initially moved higher and filled the gap created by the sharply lower opening on May 3, following disappointment with the BOJ lack of action at the end of the prior week. However, after the gap was filled the Nikkei, like the dollar reversed lower.

These dollar downticks look corrective in nature. The greenback has found some bids near JPY108.50. If this holds in the early going in North America, the dollar can recover and even re-test the highs as the unwinding of the large speculative long yen position is trimmed. Upside momentum has stalled, and a cautiousness may be creeping in ahead of the G7 meeting and the heads of state summit later this month.”