USD/JPY: On the back foot, ignores Aso's bullish exchange rate analysis

• Japan's Aso sees higher USD once the yield differential reaches 3 percent.
• USD/JPY ignores the comments, keeps losses.

Japan's Finance Minister Aso believes the interest rates in the US are set to rise further in the near future as Trump's tax cuts and higher spending will lead to higher deficits.

The Finance Minister went a step further and said the greenback would likely rise once the US-Japan rate differential widens to 3 percent. However, Aso's exchange rate analysis has gone unnoticed as far the impact on the USD/JPY is concerned.

The pair continues to trade on the back foot at 106.55, having clocked a two-week high of 107.01 yesterday. The spot may regain poise if the European and the US equities find bids ahead of the extended weekend. Further, an above-forecast US personal spending reading could also boost the demand for the greenback.

• Read: USD/JPY: Bearish bias in options market at weakest since Jan 23.

USD/JPY Technical Levels

A close below 106.34 (30-day MA) would signal a temporary top is in place at 107.01 and may allow a deeper pullback to 105.60 (March 16 low) and 105.25 (March 2 low). On the other hand, a break above 107.01 (previous day's high) will likely yield a rally to 107.91 (Feb. 21 high) and 108.28 (Jan. 26 low).