USD/JPY Forecast: In no man's land, needs 10-yr T yield above 2.4 percent

Omkar Godbole FXStreet Contributor

The Dollar-Yen pair is up 0.58% or 65 cents at $113.30 this Friday on renewed tax reform hopes.

The US Senate's decision to approve 2018 budget proposal opened doors for GOP to enact the tax overhaul code without democratic support. This is good news for Trump administration, which has failed repeatedly to repeal and replace Obamacare.

Tax cuts are inflationary, hence, the Treasury Yields strengthened after Senate's decision hit the wires. The 10-yr yield and the 30-year yield is up at least 4 basis points, while the 2-yr yield is flat lined. Thus, the yield curve (difference between the 10-yr yield and the 2-yr yield) has steepened to 80 basis points.

The uptick in the 10-year Treasury Yield is lifting the USD/JPY pair. However, the benchmark yield is still well below the recent high (and strong resistance) of 2.4%. So, it should be too early to call an upside break on the USD/JPY pair.

The USD/JPY technicals suggest the pair is currently trading in no man's land, marked by the recent high of 113.44 and the weekly low of 111.65.

Daily chart

The chart shows-

50-MA and 200-MA crossover
RSI is bouncing off the neutral 50 line
The 100-MA is still sloping downwards and the ADX line shows weakness in the trend
Trendline drawn from the March high and July high is seen offering resistance at 113.70

View

The resistance at 113.70 could be put to test today.
A sustained move higher is likely only after the 10-year yield breaks above 2.4 percent.
The downward sloping 100-MA and the flat ADX line suggests gains could be capped around 113.70 levels.
On the downside, a break below the weekly low of 111.65 would open doors for a quick-fire drop to 110.73 (weekly 100-MA).

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.