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USD/JPY bulls trying to take back control in Tokyo on 112.50

  • USD/JPY: bulls taking back control after stock lead sell-off in NY.
  • Wall Street finished mixed on techs selling off and US 10 years did no favours for the pair either.

USD/JPY is stabilising in the Asian session following a late sell-off in NY down to a weak test of the 112.40 level. Currently, USD/JPY is trading at 112.55, up 0.05% on the day, having posted a daily high at 112.59 and low at 112.36. 

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Overnight, and following Despite Kuroda sounding a bit more dovish yesterday, USD/JPY was capped again in the NY morning at 113.08 and the Nov 9th swing low. This was also an area where the daily Cloud top is located, and offers to the pair down to a low of 112.37 with some last minute offers into the Wall Street close as US tech stocks sold off.

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However, at the start of the overnight sessions, the greenback was on the front foot following Saturday’s US Senate tax reform plan passage. The US dollar index was up 0.4% on the day while the 2yr yields remained elevated at 1.81%, making for a nine-year high. However, the ten-years were not so elevated and dropped from 2.41% to 2.38%. Eyes will now turn to next week's FOMC meeting while we trade through a dead spot in respect of there not being any Fed speakers between now and then. 

USD/JPY levels

  • Support levels: 112.65, 112.10 and 111.75.
  • Resistance levels: 113.10, 113.45 and 113.80.

Valeria Bednarik, chief analyst at FXStreet explained that the pair retains a technical positive stance ahead of the Asian opening, with buyers defending the downside around 112.65 ever since the day started. "In the 4 hours chart, the pair is unable to surpass its 200 DMA, horizontal around the mentioned daily high, while technical indicators have picked up within positive territory, but hold below their previous highs. The pair has a strong static resistance area around 113.10, where it presents multiple intraday highs and lows, with gains above the level opening doors for the critical 114.40 region. Below 112.65, the pair will likely close the mentioned gap, at 112.07," Valeria added.


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