USD/JPY: Bulls taking on fresh highs at 108.20 in Tokyo open


  • 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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD drops below 1.11 amid upbeat US data, trade concerns

EUR/USD is trading below 1.11 after robust US housing figures and solid consumer sentiment figures were published. Earlier, the common currency suffered from the concerns of new US tariffs on the EU.

EUR/USD News

GBP/USD down 100 pips after UK retail sales badly disappoint, amid USD strength

GBP/USD has plunged below 1.3050 after UK retail sales badly disappointed with a fall of 0.6% in December, on top of downward revisions. Odds of a BOE cut have risen.

GBP/USD News

Crypto market hyperspace mode On

The secondary actors of the crypto-sphere awaken and rally hard. Leading coins battle with greater resistance at the gates of a full bullish market. The only risk is an over-shoot, but that sentiment remains neutral.

Read more

Gold: Sustained move beyond 200-hour SMA sets the stage for further gains

Gold edged higher through the mid-European session on Friday and is currently placed near the top end of its weekly trading range, around the $1560 region.

Gold News

USD/JPY: Losing bullish momentum but retaining gains

Chinese encouraging data kept markets in risk-on mode at the beginning of the day. The US January Michigan Consumer Sentiment Index is seen at 99.3, matching December figure. USD/JPY holding at the upper end of its weekly range could correct lower.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures