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USD/JPY: stabilizing in a slide below the 50 hourly SMA

USD/JPY has tailed off in Asia while price looks to stabilise halfway through the Tokyo session just above 112.20 support as the yen continues to battle on despite the risk-on climate in global stock markets.

The FX space governed by the flattening yield curve with markets pricing out prospects of tighter Fed policy on the long end, anchoring the dollar despite a rise in near-term yields while US equities were encouraged by the flattening yield curve. 

In the absence of key data drivers and with the Thanksgiving holidays around the corner in the US, attention stayed with the spread while the 10-year note benchmark unchanged at 2.37%. However, the 30-year note interest down to 2.77% from previous 2.79%. "The yield-curve keeps flattening, currently at levels not seen in ten years, raising concerns over the economic future of the US," noted Valeria Bednarik, chief analyst at FXStreet. 

In other events after the US session close and in early Asian markets, as part of a larger series of conversations with former BOE Governor Mervyn King, Federal Reserve Yellen spoke to an audience at New York University over a number of topics, including as follows:

  • Janet Yellen's speech: what other methods are there for shrinking balance sheet?
  • Janet Yellen's speech: What is the biggest threat to global markets?
  • Janet Yellen's speech: Meets regularly with Mnuchin and Cohn; do not offer advice on monetary policy
  • Janet Yellen's speech: Dangerous to allow inflation to drift down and miss target

USD/JPY levels

Meanwhile, Valeria explained that the 4 hours chart for the pair shows that the price remains well below its 100 and 200 SMAs, with the shortest approaching the largest from above, reflecting market's bearish sentiment towards the pair. "At the same time, the Momentum indicator aims higher within neutral territory, while the RSI gains traction downwards around 43, giving mixed signals but anyway leaning the scale towards the downside. Monday's high at 112.71 is the immediate resistance, followed by the 113.00/10 region, with some stability above this last required to reduce the bearish pressure," Valeria explained further.

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