USD/JPY: bears looking for a break of 111.90 as politics weigh
|- USD/JPY oscillates between near-term resistance and support in fry start to the week.
- USD/JPY downside favoured on a technical basis.
USD/JPY has been oscillating around 1.12 the figure in the open of Asia on Monday with a high of 112.19 and a low of 111.88 so far, currently trading at 112.06 at the time of writing.
USD/JPY crash-landed last week as a flight to safety took the yen higher across the board while markets remain concerned about the tax bill which is weighing on stocks. The US House voted 227-205 to overhaul the tax code. 13 Republicans voted no. However, the Senate Finance Committee's vote on tax reform will not take place until after Thanksgiving though, (Thanksgiving is 23rd November), and that is where things could all fall apart, weighing on the greenback and stock markets.
In terms of rates, the US 10yr treasury yields fell from 2.37% to 2.34%. However, 2yr yields rose yet again from 1.70% to 1.73% as being a fresh nine-year high. The Fed fund futures yields continue to factor in the chance of a December rate hike at almost 100% while the BoJ is sidelined. Talk of a new government that is even more dovish is also something that supports USD/JPY on such divergence between the two central banks.
Germany's Merkel - Will communicate failure of coalition talks to President
USD/JPY levels
Meanwhile, however, the daily momentum indicators are pointing increasingly lower which brings in the 111.50/70 area below 111.90/112.00 current support as price remains resisted at 112.35 ahead of 112.60/00.
Valeria Bednarik, chief analysts at FXStreet explained that the technical readings in the daily chart present a strong bearish stance, as indicators head south almost vertically within a negative territory, as the price nears the 100 and 200 DMAs, both converging around 111.50, a critical support for the upcoming sessions, as below it, the downward momentum will likely accelerate. "In the 4 hours chart, the price has extended far below its moving averages, with the 100 SMA gaining downward strength above the larger, while technical indicators maintain their strong bearish slopes near oversold readings, in line with the longer-term perspective."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.