- USD/JPY making fresh highs in Tokyo opening hour.
- Talk of an interim trade deal being put together by US and Chinese officials.
Overnight, USD/JPY initially dipped to 107.52 as US yields fell after the European Central Bank's announcements but then recovered as risk sentiment improved and has rallied to score yet another six-week high at 108.20 in Asia today. USD/JPY is currently trading at 108.16 having risen from a low of 108.05 to the 108.20 aforementioned high, +0.06% on the day so far.
Overnight, the dollar failed to really make the most of the US Consumer Price Index result, the highest in ten years, but the DXY remains within the 98 handle and within the highest ranges since 2017. The problem is, despite the annual rate moving up to 2.4%YoY, the highest reading since September 2008, the inflation pressures are building just at the time the economy is showing signs of slowing and given the growth story, the markets expect yet another 25bp rate cut from the Fed next week.
US yields supporting USD/JPY higher
The US 2-year Treasury yields are, however, 4bp higher at 1.72%, while the 10's gained 5bp to 1.80% which lifted USD/JPY - "Markets are pricing 24bp of easing at the 19 September Fed meeting, and a terminal rate of 1.21% (Fed funds rate currently 2.13%)," analysts at Westpac noted.
Meanwhile, there is talk on the grapevine of an interim trade deal being put together by US and Chinese officials. Analysts at Westpac have the story:
"Bloomberg released a “sources” story claiming that the US administration was considering an interim trade deal with China that would either freeze or even roll back US tariffs, in particular avoiding the tariffs due to hit consumer goods in December. This produced a bounce in US stocks and risk currencies but <1 hour later, a “senior administration official” told CNBC that such a deal was “absolutely not” being considered."
USD/JPY levels
Valeria Bednarik, the Chief Analyst at FXStreet explained that the USD/JPY the 4 hours chart, the pair remains in the bullish path, as despite lacking directional strength, technical indicators hold within overbought levels:
"In the mentioned chart, the 20 SMA maintains its bullish slope above the larger ones, providing a dynamic support. Furthermore, the pair is developing above the 61.8% retracement of its August decline, now a critical support at 107.45. As long as it holds above it, the pair has room to extend gains up to 109.31, August monthly high."
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0800 as trading action turns subdued
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.