CHF/JPY: Pullback shallow until geopolitical angst subsides, BoJ hikes or abandons YCC – SocGen

FXStreet Insights Team FXStreet

Onwards and upwards. CHF/JPY has broken the previous high of 159 in 1979. Economists at Société Générale analyze the pair’s outlook.

CHF/JPY technically overbought after overcoming high of 1979

The BoJ meets next week. Governor Ueda last week signalled no change in policy. The cross is technically stretched so a correction could be overdue. However, it is difficult to envisage a sustainable turnaround until the BoJ raises rates, abandons YCC or the SNB sells Swiss Franc. Neither of the three scenarios looks plausible in the near term.

BoJ intervention last year in USD/JPY largely passed CHF/JPY so we should not overplay downside if the central bank decides to sell USD above 150.

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