COMMENT-Dollar up vs yen on mostly hot US data, but upside looks limited

USD/JPY price action suggests that even if 2023's 150.165 highs can be cleared, any attempt at 2022's 32-year peak at 151.94 would be a major selling opportunity.

Prices made only modest intraday highs despite unexpected strength throughout the U.S. retail sales report, sending Treasury yields soaring toward recent peaks.

A steep drop in the NAHB index helped to cap Treasury yields, as real estate is most affected by soaring borrowing costs.

Rising JGB yields — with 10-year yields up 5bp — also helped mitigate the rise in Treasury-JGB yields spreads.

This morning's flash crash from 149.75 to 148.75 on worries the BoJ will raise its inflation forecast and the MoF could make good on repeated FX intervention threats also revealed market skittishness and potential downside risk if Japanese officials were to act to support the yen.

This year's uptrend has occurred within a rising channel, the top of which will reach last year's 151.94 peak on Wednesday. Upper 21- and 30-day Bolli at 150.24/37 are immediate hurdles if October's 150.165 high is cleared. But weekly charts and options pricing suggest limited upside. The daily kijun support is at 148.31, but major correction targets are at 144.44 and 142.60.

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