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USD/JPY losing grip on the 112 handle in Tokyo open

  • USD/JPY fragile around the 112 handle.
  • USD/JPY needs to get over 112.50.

USD/JPY is neutral/bearish in the Tokyo open as things are about to get busy in FX again with Aussie CAPEX and Chinese data on the cards, while a hit in Kiwi on a shocking business confidence number is providing some action in Asia as well. Currently, USD/JPY is trading at 112.01, up 0.13% on the day, having posted a daily high at 112.09 and low at 111.86.

As noted by analysts at ANZ, things are getting volatile out there and the yield on the US 10-year is currently up 5bps to 2.3880%, favouring the upside in USD/JPY despite the VIX lifting to 10.8 overnight. 

US GDP beat estimates in the previous session and Yellen was hawkish, yet the dollar was unable to really take off on the 112 handle in NY and perhaps Tokyo will take things forward instead?

The DXY ended flat within a range of 92.992 - 93.435, opening 93.212 vs a previous close of 93.270. US yields were closing around 2.3880 + 2.60% and within a day's range of between 2.3188% - 2.3935%.

US session data/events failed to send DXY higher

US Q3 GDP 2nd estimate arrived at 3.3%, vs 3.2% expected and 3.0% previous. Yellen says she is worried about the sustainability of U.S. debt trajectory and wants to avoid rapidly raising rates and causing a recession. Then, it was over to Fed's Williams who said that the Fed should continue to raise rates slowly. Meanwhile, markets await the PCE from today's US session is the next big fixture.

USD/JPY levels

  • Support levels: 111.60, 111.20 and 110.80.
  • Resistance levels: 112.10, 112.50 and 112.90.

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, technical indicators hold within positive territory, but the RSI has turned lower, while the Momentum also eased, suggesting buying interest diminished in the last hours. "Furthermore, the price remains below a strongly bearish 100 SMA, currently at 112.50, limiting the upward potential in the pair," Valeria added.

Key notes form US session:

  • Forex today: should the dollar be higher?
  • Wall Street: Dow Jones hits record high, Nasdaq drops sharply
  • Crypto Today: Bitcoin slumps below $10K
  • US Q3 GDP: Good corporate figures - Wells Fargo
  • Fed's Beige Book: Price pressures have strengthened since last report
  • Fed's Williams: Fed should continue to raise rates slowly
  • WTI slides below $57 on uncertainty over extension of oil output cut
  • ECB's Weidmann: German economy is performing 'exceptionally' well
  • Yellen testimony: Its puzzling why inflation has been falling this year
  • Yellen testimony: Important to gradually move policy toward neutral level

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