USD/JPY bulls run into supply and risk appetite dwindles on N.Korea headlines
|- USD/JPY advance capped in early Asia as markets brace for another US/N.Korea standoff.
- Two unidentified projectiles were fired into the East Sea.
USD/JPY has started to turn south in early Asia weighed by news that two unidentified projectiles were fired into the East Sea as North Korea gets frustrated by lack of progress in talks with the US. The launch appears to resemble the May 2019 firing of two short-range missiles, which travelled approximately 260 miles and was fired from the Wonson area.
"Our military, in preparation for additional launches, is maintaining (its) readiness posture by monitoring related movements,"
an official in the South Korean Joint Chiefs of Staff office said.
USD/JPY is holding its ground for the time being but it would appear that the markets now need to contend with an additional threat to world peace as North Korea displays the nation's dissatisfaction with the lack of progress made by which the US were meant to bring sanctions relief for North Korea in return for nuclear disarmament. The weapons tests come as the first launch of projectiles since US president Donald Trump met Mr Kim at the demiliterised zone which separates the two Koreas at the end of June.
Japanese government source: 'No impact on Japan's national security'
- Projectiles were two short range ballistic missiles.
- Missiles did not reach Japan's Exclusive Economic Zone.
- No impact on Japan's national security.
USD/JPY levels
Analysts at Commerzbank explained that USD/JPY continues to recover from the 2019 uptrend at 107.24 and is approaching the 3-month downtrend at 108.37:
"Currently we will neutralise our forecast near-term. However while the market is capped by 108.99 we will maintain a negative bias (initial resistance is the 108.37 downtrend and the 108.58 55 day ma)."
"The 107.24 uptrend should act as a near term breakpoint to the 106.78 recent low. Our short term target is 105.87, the 78.6% retracement of the move seen this year. Minor resistance lies at the 109.02 mid-May low and also at the 110.84 April 10 low and the 110.59 200-day moving average. These guard the 2015-2019 downtrend at 111.94."
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