USD/JPY: catching an early bid in early Tokyo open, testing 21/10 hourly SMA cross

Overnight, USD/JPY dropped from 113.20 to 112.48 (to score a fresh a one-month low) before risk sentiment improved towards the close. The US benchmarks finished in the red again, S&P 500 -0.56%, DJIA -58% and NASDAQ - 0.60%. Currently, in the Tokyo open, USD/JPY is trading at 113.42, down -0.02% on the day, having posted a daily high at 113.49 and low at 113.37.

Forex today: euro took the limelight, two-way business in mixed risk sentiment

Volatility was on the rise again overnight but there was an air of caution in the markets supporting the safe havens such as the Yen. The fall in oil and other commodity prices (WTI down 2.1% to $55.60/bbl) may have contributed to that better-fixed income tone and a drag on Wall Street as a result. The greenback was weak in its own right while traders start to lose confidence in the Trump trade and await any sort of progress that might come from a full House voting in Washington tonight on tax reform.

The euro took full advantage of the environment, driven by positive results n the EZ economy this week with the firmer-than-expected German Q3 GDP data that lent early impetus to the euro. The DXY, weighed over 50% to the euro dropped to the lowest levels since late Oct. However,  US yields then rallied back and the DXY recovered to more respectable levels at 93.88, as the recovery high, before leaning on 93.78/80 support area again.

USD/JPY levels

From a technical point of view, Valeria Bednarik, chief analyst at FXStreet explained that the risk remains towards the downside." In the 4 hours chart the price is below its 100 and 200 SMAs for the first time in over a month and a half, with the largest now acting as immediate resistance around 113.25. Indicators in the mentioned chart have bounced from oversold readings but lost upward strength within a bearish territory, supporting a bearish extension for the upcoming sessions," Valeria added.