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USD/JPY looking for a close below 111.03?

  • USD/JPY closes below 111 .03 are key for the bears.
  • USD/JPY on the backfoot in Tokyo, eyes look ahead at US PCE.

USD/JPY dropped from 111.45 in European trade to go on to print 110.82 lows in NY and is offered below the 111 handle again in Tokyo from 111.20 recovery highs. Currently, USD/JPY is trading at 110.98, down -0.09% on the day, having posted a daily high at 111.32 and low at 110.93.

USD/JPY is in a key area here given 111.03 is the 50% level of the Sep-Nov rise. Meanwhile, markets are fickle about the greenback that is seeing some two-way business with an overnight range of between 92.496 - 92.928. US 10yr treasury yields fell from 2.35% to 2.32%, with some jitters over a headline that claimed preparations for a North Korean missile launch had been detected. Fed fund futures yields continued to price the chance of a December rate hike near 100%.

BOJ Kuroda: Global economy continues to recover

The mounting concerns over the US inflation outlook have been pressuring the dollar and this week's core PCE inflation reading on Thursday will be key while with investors stay watchful over this factor going forward, with concerns raised by Yellen recently and the latest FOMC minutes. 

In the same groove, Powell confirmation hearing on Tuesday is also being eyed amid tax plans. An ear to the ground will also be kept in respect to the recent headlines over the North Korean missile launch that had been detected.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair has shed around 410 pips ever since topping at 114.72 at the beginning of the month, maintaining a strong bearish trend according to technical readings in the daily chart:

"The pair fell further below its 100 and 200 DMAs as technical indicators resumed their declines within a bearish territory. In the shorter term, and according to the 4 hours chart, the risk is also lean towards the downside, as the price is well below its 100 and 200 SMAs, with the shortest extending below the larger, and technical indicators remain within a negative territory, although with limited directional strength," Valeria argued. 
 

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