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USD/JPY: bears in charge in Tokyo, 112.80 to give way to 112.50?

  • USD/JPY bears are taking control in the Asian session.
  • USD/JPY to find bids at 112.70 and then at 112.50?

USD/JPY has been consolidating around the 113 handle until markets got into risk-off mode on the Trump news. Currently, USD/JPY is trading at 112.91, down -0.13% on the day, having posted a daily high at 113.16 and low at 112.88.

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Recent price action in USD/JPY and US rates

USD./JPY dropped from the aforementioned highs just before the Tokyo open.  Meanwhile, US 10yr treasury yields climbed from 2.32% to 2.36% overnight, while the 2yr yields made another nine-year high moving from 1.69% to 1.71%. Within the improved risk sentiment, US stocks bounced amid solid company earnings making for a soft yen towards the 113 handle below the hourly cluster of MA's resisted. 

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that from a technical point of view, the 4 hours chart shows that the pair was unable to recover above the 200 SMA, while technical indicators have bounced modestly within bearish territory, but remain well below previous highs, all of which maintains the risk towards the downside.  

"Back above 114.00 and the 9 Nov high of 114.06 is unlikely today but if wrong, could return to 114.35/45 and beyond, towards the 114.73, 6th Nov high. Further out, we could eventually see a retest of the descending trend resistance, currently at around 114.90, and a break of 115.00 would then see little resistance until 115.20 and then 115.50," explained Jim Langlands at FX Charts who added that the downside will once again find bids at 112.70 and then at 112.50, "This may hold today, but if wrong, look for a move towards 112.30 and 112.00, ahead of strong support at 111.80 (100 DMA/200 DMA)."

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