USD/JPY: bullish start in Tokyo despite heavy Wall Street close

USD/JPY was in the hands of the bulls overnight with the yen slipping back from highs of 112.43 in early NY trade with US stocks slipping back from recent highs. The Dow ended 180 points lower, snapping a 4-session streak, as renewed trade-war fears kick in. Also, the political climate in Washington is once again boiling up with the talk of the resignation of deputy Attorney Gen’l Rosenstein adding more fuel to the political dramas. Elsewhere, the BoJ minutes were same-same and there was no reaction in the yen and instead traders get set and ready to rock leading into the FOMC and US GDP data this week. 

US yields on the rise to fresh highs

"The US 10yr treasury yield continued to range sideways a four-month high, between 3.06% and 3.09%. 2yr yields also ranged sideways but did nudge 2.83% - a fresh high since 2008. Fed fund futures yields continued to price 100% chance of a hike on Wednesday, while the chance of another hike in Dec is priced at 90%," analysts at Westpac noted. 

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair heads into the Asian session at the upper end of its daily range, not far from 112.86, the two-month high set last week:

"In the 4 hours chart, the pair is well above bullish 100 and 200 SMA, while technical indicators remain within familiar levels, the Momentum heading lower and the RSI higher, both well above their midlines, favoring additional gains on a break above the mentioned 112.86, now the immediate resistance. The next one comes at 113.17, July monthly high. 112.45, on the other hand, is the immediate support ahead of 112.14, August monthly high."