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USD/JPY slightly offered in quiet Tokyo

  • USD/JPY has been pressured a little in Tokyo around the pivot and ascending support line from the prior day's lows. 

USD/JPY is currently trading at 113.51, having travelled between a narrow 113.49-113.67 range in a quiet start to the last trading day of the week in Asia. The markets have been consolidative within a chop overnight following the ECB announcements and conflicting sentiment surrounding trade. 

Wall Street was choppy, getting off to a good start on the back of President Donald Trump assuring observers that talks have been progressing, with the DJIA opened up 0.2% at the start of trade but falling on reports that the Chinese had arrested another Canadian national in apparent retaliation for Meng’s arrest soured the market's mood. There were also wires that Trump’s aids were warning the president that his authority to intervene in the affair is limited. 

As for the ECB, the event was mostly as expected, with nothing changing although there was a significant moment when President Draghi said in the press conference that downside risks were growing.  On the emerging risks to the outlook, he said they are “broadly balanced,” but are “moving to the downside.” 

US dollar mixed

Meanwhile, the dollar was mixed and the US 10yr treasury yield was unchanged at 2.91% after dipping to 2.89%. The 2yr yield slipped from 2.77% to 2.76% and the Fed funds rate futures continued to price the chance of a rate hike on 19 December around 75% - (March rate hike is up to a 30% chance (from 20%)).

USD/JPY levels

  • Support levels: 113.10 112.90 112.55 
  • Resistance levels: 113.70 114.00 114.40

Valeria Bednarik, Chief Analyst at FXStreet explained that the pair is up on a daily basis, settling above its previous weekly high>

"Technical readings continue leaning the risk to the upside, the upward momentum faded. In the 4 hours chart, the 100 and 200 SMA continue running parallel in quite a tight range, although advancing, while technical indicators turned south within positive readings. The risk of a bearish extension will be higher on a break below 112.90, while bulls will likely take over on an extension above 114.00".

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