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USD/JPY: better bid as risk rebounds, headed for the 114 handle?

  • USD/JPY bulls in control in Tokyo.
  • USD/JPY looking for territory on the 114 handle? 

After a broadly bullish start in London and early NY, despite a wobble in the benchmarks on Wall Street, USD/JPY has started out in Tokyo on the bid. Currently, USD/JPY is trading at 113.71, up 0.10% on the day, having posted a daily high at 113.74 and low at 113.56.

USD/JPY has been pressured higher after risk rebounded in NY.  The near-term spread favoured the bid as well with US Treasuries' yields in the 2yrs moving higher from 1.65% to 1.67% and making for another fresh high between now and Oct 2008. The 10-year note benchmark hovered around Friday's close of 2.40%, while the 30-year note fell to 2.86% from previous 2.88%. 

  • Wall Street pares early losses to end day slightly higher

Meanwhile, the divergence between the Fed and the BoJ continues to favour the bid above the Kijun at 113.19. Fed fund futures yields continued to price the chance of a December rate hike at almost 100%. BOJ's Kuroda was reiterating that there's a "long way to go before reaching inflation target." In terms of data, markets await US CPI, US retail sales and Fed's Brainard and Williams as well as the full house vote on US tax reform on Thursday. 

  • US Treasury Secretary Mnuchin prefers corporate tax cut next year

USD/JPY levels

USDJPY: Support will be seen at 113.20

Valeria Bednarik, chief analyst at FXStreet explained that the short-term picture for the pair is neutral, as in the 4 hours chart, it's still trading between its 100 and 200 SMAs, as technical indicators hover around their mid-lines, lacking clear directional strength. "The main support is the 113.10 price zone, where the pair has the mentioned 200 SMA and last week's low, with a break below the level exposing the 112.50 region. The pair would need to recover above the 114.05 level to look less vulnerable towards the downside, albeit selling interest will likely re-appear around 114.40," Valeria added. 

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