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USD/JPY halts the up move around 109.00, trade in focus

  • The pair eases some ground after testing tops in the 109.00 area.
  • Yields of the US 10-year reference also recedes from peaks beyond 2.70%.
  • US NFIB index surprised to the upside at 104.4.

The upside momentum in yields of the US 10-year note helped USD/JPY to clinch fresh 4-day highs in levels just above 109.00 the figure during early trade.

USD/JPY looks to trade, yields

The pair keeps the upside bias intact so far today, regaining the 109.00 handle and above and recording at the same time fresh multi-day peaks, always backed on the positive performance of US yields.

In addition, speculations of a positive outcome from the US-China trade talks appears to support some bias towards the risk-on trade, favouring the selling mood in the Japanese safe haven. Reinforcing this scenario, today’s VIX (aka ‘the panic index’) is navigating fresh lows in the area near 20.70, levels last visited in mid-December.

In the calendar so far, the US NFIB Small Business Optimism index came in at 104.4 for the month of December, exceeding previous estimates, while November’s trade balance figures and the JOLTs report are coming up next.

What to look for around USD/JPY

The ongoing US-China trade talks remain vital for the performance of the broad risk appetite trends in the near term. In addition, spot keeps the focus of attention on US yields, also correlated to risk. Further out, the health of the US economy should remain in centre stage along with the Fed’s potential re-assessment of its rate path this year.

USD/JPY levels to consider

As of writing the pair is up 0.03% at 108.73 facing the next resistance at 109.08 (high Jan.8) seconded by 109.44 (10-day SMA) and then 111.13 (200-day SMA). On the downside, a break below 108.03 (low Jan.7) would aim for 107.51 (low Jan.4) and then 105.00 (2019 low Jan.2).

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