USD/JPY: yields, risk off, take your pick, where next?
USD/JPY: will bulls commit at 109 the figure, or 108.15 uptrend here we come?
Despite an hourly set back on the charts today, (109.47 down to 109.12), USD/JPY has continued in the weekly advance to the 100-W SMA at 109.48, propped by prospects of the Fed in fourth gear at this week’s meeting, signalling to markets that rate hikes will follow in due course as economic data and inflation continue to pick up.
Currently, USD/JPY is trading at 109.18, up 0.11% on the day, having posted a daily high at 109.47 and low at 109.01.
USD/JPY is being pressured as the NY session gets going with a fall in stock prices. Price son Wall Street were initially bid at the start of the day, with pre-trading activity spurred by better than expected profits and revenues for MC Donalds in Q1.
Fundamentals at play, weighing on stocks
However, there are fundamental concerns at the fore, including the Iran nuclear deal, China trade talks his week, the Fed and Korea, all simmering away in the background. At the same time, the dollar has taken a hit, trading below the dau’s highs so far within a range of 91.4820-91.9190, at 91.7180 at the time of writing, fuelling a bid in the yen below the 100-hr SMA at 109.18. The dollar is being weighed by US yields that have come off the recent highs, with the benchmark 10-year yield falling to as low as 2.94% on Monday.
Bulls are safe above the 109 handle, but a break below the 108.50 level, support is at the 108.15 uptrend and 107.90 mid-February high, then the round 108.00, 107.00, 106.83 (50-D SMA) and 106.00 levels are exposed. The 2018 low is at 104.63 as a key support. 104.20 gives way to a downside measured target of 102.58, guarding a run to 101.19/99.00 as the June-to-November 2016 lows ahead of 100.70/99.00. On the flip side, 110.00 is the next target to meet (200-D SMA 110.23) ahead of the Feb highs at 110.50.
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