USD/JPY bears look to be in control again, testing 111.20 downside

Currently, USD/JPY is trading at 111.35, up 0.17% on the day, having posted a daily high at 111.43 and low at 111.15.

The yen was bid overnight with markets still cautious around Trump's policies being held up and potentially going undelivered. The reflation trade has been unwound with the dollar trading below the 100 mark and unable to catch a convincing bid. 

Wall Street mixed ahead of HoR vote

The stock markets on Wall street were mixed but investors ran with the NASDAQ at least while the S&P was pretty much flat making for a more or less positive close. Asia has followed suit in the open of Tokyo and the yen is looking robust again as USD/JPY bears test 20 pips lower from the early Asian recovery highs. 

For the day ahead, we have Chair Yellen speaking at a Fed community development conference. Dove Kashkari is also speaking later in on at the same conference called ‘Strong Foundations: The Economic Futures of Kids and Communities’.  However, the key event for stocks and the yen will come from the stock markets will be keeping an eye on the developments in respect to the House of Representatives vote on passing the legislation to dismantle Obamacare. 

USD/JPY levels

EUR/JPY: recovers back on to the 120 handle but lacks legs

The technical outlook is clearly bearish according to the 4 hours chart and Valeria Bednarik, chief analyst at FXStreet, technical indicators are heading sharply lower within extreme oversold territory, whilst the price has extended further below its 100 and 200 SMAs. "A break below 110.70, the immediate support, should lead to a continued decline towards 109.90, the 50% retracement of the November/December rally."