Currently, USD/JPY is trading at 111.53, up 0.64% on the day, having posted a daily high at 111.74 and low at 110.24.
- US Dollar jumps suddenly following Comey's video suggesting that investigation obstructions "never happened"
USD/JPY rallied as the DXY took off in a flash move with some analysts citing a video of Comey that was recorded back on the 3rd of May. Comey was suggesting that there had been no obstructions to FBI investigations. USD/JPY rallied from 111.20 to aforementioned highs while the DXY hit a high of 98.07.
However, the Yen remains the clear outperformer on a week to date basis, and the broader tone of risk aversion remains a dominant driver, leaving the near-term balance of JPY risk tilted to the upside, according to analysts at Scotiabank. This could well be very true considering when analysing the video of Comey, under oath, he's asked specifically if someone at the Department of Justice or the Attorney General had ever asked him to halt an investigation, not Trump or anyone at the Whitehouse; so watch for a possible reversal of this spike in the DXY.
USD/JPY will still be finding support on the back of narrowed interest rate differentials at both the short and longer-end of the curve. The 10-years are currently up +0.31%, but still way below the psychological 2.30% within the day's range of between 2.1791-2.2486%. USD/JPY remains fragile at this resistance of the 111.50 where the pair is currently changing hands after the fade from the initial flash spike to 111.73.
Analysts at Scotiabank explained that the USDJPY short-term technicals are bearish. "Momentum signals are bearish, DMI’s are confirming the shift in the balance of risk, and USDJPY has cleared its 50 day MA (111.55) shifting the focus to the 200 day MA at 109.73. USDJPY has tested the last major retracement level of the April-May rally, opening up the risk of a full retracement to the April low around 108. A reminder of the late April (post-French election first round) gap in the mid-1.09s."
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