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USD/JPY: maintains form on the 111 handle, despite geopolitical risks

  • USD/JPY: tugged, pulled and pushed, but to maintain form on the 111 handle?
  • USD/JPY: traders look to key US data ahead and progress in US tax reform.

USD/JPY is catching a Tokyo bid, despite the elevated risks in the latest moves from N.Korea, antagonising the global alliance of between the US, S.Korea and Japan. Currently, USD/JPY is trading at 111.60, up 0.14% on the day, having posted a daily high at 111.67 and low at 111.35.

Forex today: "what a day!"

The day was choppy for USD/JPY traders with the yen tugged, pushed and pulled on continuous headlines coming out over various key fundamental drivers in the markets.

USD/JPY was trading better bid for the best part of the European and US session, firstly supported in NY on the strong US data,  hitting 111.47 the high before some conflicting headlines around Washington's progress with tax reform. Also, Powell was following in Yellen's dovish footsteps on the long end while news that N.Korea had indeed fired a missile towards Japan and that PM Abe had ordered an emergency cabinet meeting sent markets into another flurry of concern offering a short-lived bid in the yen. In NY, the 10-year note benchmark struggled between 2.32% and 2.33% for most of the day, while the yield for the 30-year note also hovered around its previous close of 2.76%. DXY was up +0.35% at the close within the range of 92.827 - 93.245.  

USD/JPY going forward?

Meanwhile, for the sessions ahead, month-end position squaring could be  favoring the upside on the 111 handle given Nov's slide and importers below 111 could be interested, keeping the bid alive. The key data from here stay with the US and the PCE will likely be a main focus point for markets given the inflationary concerns going forward that have been voiced by the Fed of late. 

USD/JPY levels

  • Support levels: 110.80, 110.35, 110.00.
  • Resistance levels: 111.60, 112.00, 112.45.

A hard resistance could be seen at the 200-DMA at 111.70 while breaks and a close below 111 could open up further downside towards 110.00. 

Valeria Bednarik, chief analyst at FXStreet explained that the pair maintains its short-term bearish stance: "In the 4 hours chart the price remains well below its 100 and 200 SMAs, with the shortest accelerating south below the largest, while technical indicators head marginally lower within neutral territory. The pair would need to regain the 111.60 level to shrug off the negative stance, something quite unlikely in the current scenario," Valeria explained.

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