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USD/JPY: consolidates at recent highs, dollar firmly bid

  • USD/JPY nudged higher from 113.00 to 113.45 overnight where it is currently oscillating in Tokyo's open as the yen can't break the dollar's grip.
  • The greenback has been better bid by default considering the number of negative news overseas, from Brexit, France and China to concerns of global growth in general. 

The pair has climbed in recent session from the 112.30s to 113.47 the high while US yields swing around depending on risk sentiment. Overnight, the 10 year is net 3bp higher over the day, at 2.88% in late NY trade, while the 2yr yield rose from 2.72% to 2.77%.

Eyes on the curve

Fed funds rate futures were little changed on the December decision but yields rose 4bp through end-2019. This has put the curve between the 2yr/10yr treasury approaching single digits as investors continue to bring forward end of the economic cycle. Meanwhile, the Fed funds rate futures were little changed on the December decision but yields rose 4bp through end-2019. The Fed Funds futures market now pricing 11 bps rate cut in 2020.

USD/JPY levels

  • Support levels: 112.90 112.55 112.20 
  • Resistance levels: 113.40 113.75 114.00

Valeria Bednarik, Chief Analyst at FXStreet explained that the pair heads into the Asian opening with a modestly positive tone.

 "Technical indicators are developing within positive ground and near daily highs, although without directional strength, while the pair holds a handful of pips above its 100 and 200 SMA, both confined to a tight 10 pips' range and directionless. The positive tone is being reinforced by the fact that the pair has bounced sharply from its 100 DMA after a second attempt to break lower. Buying interest is now aligned at around 113.00, with the bearish potential set to increase only on a break below 112.55."

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