USD/JPY eyes the 21-D EMA, supported on higher U.S. yields

USD/JPY is currently trading at 107.73, stuck in a tight range this Tokyo open between 107.66 and 107.79, albeit en-route for the 21-day exponential average. Overnight, the yen was weakest in the G10 and USD/JPY traded higher by 0.5% to 107.80 as U.S. yields continued to correct higher. The U.S. 2-year treasury yields rose from 1.72% to 1.77% while the 10-year yields from 2.00% to 2.05%. Markets continued to price in around 30bp of easing at the July meeting with a total of four cuts priced by mid-2020.

Meanwhile, as for news and data, analysts at ANZ explained that the May US durable goods headline of -1.3% was weak and argued that the data provided some push back against a 50bp rate cut by the Fed, and market pricing adjusted accordingly. The US Treasury Secretary Mnuchin said the US and China “were about 90% of the way” to a deal. "Note that he was speaking in the past tense and clearly the final 10% was too difficult last month," analysts at Westpac argued. 

USD/JPY levels

Valeria Bednarik, the Chief analyst at FXStreet explained that, technically, USD/JPY ran into an active resistance area at 107.80/90 that capped the upside:

"Ahead of the Asian session, some consolidation and a pullback could take place considering that the gains seen on Wednesday were the biggest in months. The 107.50 zone is the immediate support, and far below comes 107.05. Below the last one, the bearish pressure will likely intensify. The 4-hour chart shows the pair with a clear bullish bias in line with technical indicators. A breakout above 107.80 could boost the greenback back above 108.00, targeting 108.30."