USD/JPY: higher in Tokyo, but risks remain with a bearish bias on Brexit

USD/JPY has popped higher, continuing its advance and recovery from 105.94 early doors. 

Tokyo has opened mixed on the back of a negative close on Wall Street as crude oil continues to be a driver, falling away from $49.25 highs made in the early U.S. shift. USD/JPY has reached 106.43 so far in Tokyo's open ahead of industrial production for Japan that is scheduled for later on in the shift. 

While the bulls take charge,risks remain titled to the downside due to uncertainty about the outcome of the UK referendum on EU membership that is likely to continue rising as we head towards the 23rd referendum date. 

Update on latest Brexit poll results: 'Leave' camp continues to lead

The latest opinion polls show that momentum in the leave camp is gathering pace and uncertainty on the result remains high. Popular and major UK tabloids, such as The Sun, who's catchy and rather persuasive headline," Be Leave in Britain" is adding to the popularity of a Brexit in the UK's population. Bookmaker odds show that the probability of Brexit is now slightly higher than 30% too, as noted by analysts at Nomura who explained that amid risk-off sentiment, Japanese yields have been declining in nominal and real terms, and the latest JPY appreciation has diverged from the real rate differential.

USD/JPY levels

USD/JPY remains vulnerable on rallies to fading and the focus has shifted to the 105.55 recent low and 105.40 2014 peak as explained by analysts at Commerzbank. "While we still consider these to be key support for the market, it is clearly going to take some time to recover, for now we suspect further weakness to test these supports and intraday look for rallies to remain capped 107.85/108.35."

Valeria Bednarik, chief analyst at FXStreet explained the bearish outlook as well " In the 4 hours chart, technical indicators are turning modestly lower within bearish territory, whilst the price remains far below its moving averages, in line with the shorter term outlook."