USD/JPY: eyes on US yields, spread remains dominant

Ross J Burland FXStreet

Currently, USD/JPY is trading at 112.25, up 0.06% on the day, having posted a daily high at 112.49 and low at 112.03.

USD/JPY remains trading in the upper end of its range and holds onto the 112 handle. Yesterday, reports suggesting that Trump was enthusiastic after meeting with Taylor saw his stock rise in the betting websites and may have prompted a reversal in the yields

"The 10Y U.S.-Japan yield spread remains dominant and responsive to the ongoing search for a new Fed Chair. Short-term risk reversals are pricing a sizeable election-related premium for protection against near-term strength. Longer-term measures are softening," explained analysts at Scotiabank.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that, from a technical point of view, the upward potential remains limited, as the price seems unable to surpass a flat 100 SMA in the 4 hours chart, acting as dynamic resistance at 112.45, also the daily high. "In the same chart, the RSI indicator heads higher around 55, but the Momentum remains flat around its 100 level, reflecting the limited buying interest at current levels. Nevertheless, an upward acceleration through the mentioned level should lead to a retest of 113.43, the high set this month," Valeria explained further.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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