USD/JPY: yields and FOMC to set the tone
|USD/JPY Current price: 111.76
The USD/JPY pair peaked at 112.04 during the Asian session, easing afterwards but not by much: the pair stands around 111.76, flat daily basis. The early advance, backed by the positive tone of US equities and note yields during the past American session, was halted by a surprise headline coming from Moody's, as the credit rating company, cut China’s sovereign credit rating to A1 from Aa3, while changing its outlook to stable from negative. The pair is now trading quietly in a tight range, a the market is expecting for FOMC's Minutes, to be released later in the American afternoon, while ahead of the event, the US will release some housing data, which may put the greenback under pressure if the numbers disappoint again.
Yields will also be a big factor when it comes to the USD/JPY pair, as the 10-year note benchmark is currently at 2.28%, barely higher daily basis. From a technical point of view, the 4 hours chart shows that the advance was contained by the 38.2% retracement of the latest bullish run around 112.00, while technical indicators have managed to enter positive territory, but continue to lack directional strength. Anyway, the same chart shows that the price is midway between horizontal moving averages, reflecting the ongoing absence of directional strength. Beyond the mentioned daily high, the pair can extend its recovery short term although below 111.60 the risk is back towards the downside.
Support levels: 111.60 111.20 110.85
Resistance levels: 112.05 112.45 112.90
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