- USD/JPY is currently trading at 109.56, between a range of 109.55 and 109.68.
- USD/JPY consolidated its recovery and it is positioned above the hourly cloud where Japanese traders might be inclined to step in.
USD/JPY consolidated its Tokyo gains overnight and was propped up by improved risk sentiment following Trump's optimistic tweets that filtered through to financial markets, encouraging a recovery on Wall Street.
US President Trump’s trade comments were optimistic and he tweeted:
“When the time is right we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense.”
USD/JPY levels
Technically, the price trades above the trend line resistance and the hourly Ichimoku cloud. However, a gamble against the trend may not be the wisest trade considering the fundamentals which are dominating the market, especially considering the bearish bias across multiple time frames with the price below the clouds. A break of 109.75 could make way for a run to test 110 the figure and 10th May highs. Alternatively, a break below cloud support will open risk to the bottom of the cloud and then a test down to 109 the figure while back below trendline resistance.
Meanwhile, Valeria Bednarik, Chief Analyst at FXStreet explained that the USD/JPY pair has quite a limited upward potential according to readings in the 4 hours chart, as it's being unable to advance beyond a still bearish 20 SMA, having spent most of the day struggling around it:
"The 100 SMA keeps heading south below the 200 SMA, both far above the current level, while technical indicators spent the day consolidating below their midlines, lacking directional strength. The movement seems corrective as it will take a steady recovery above the 110.10 price zone to shrug off the bearish stance."
US stocks, DXY and yields close higher
Related to Trump's optimism, here were the closing prices for the US benchmarks, yields and the Dollar:
- The Dow Jones Industrial Average (DJIA), climbed around 207 points, or 0.8%, to finish near 25,532.
- The S&P 500 ended around 23 points higher, up 0.8%, near 2,834.
- The Nasdaq Composite rose around 87 points, or 1.1%, closing near 7,735.
- The US 10yr treasury yield rose from 2.40% to 2.43%, while the 2yr yield rose from 2.18% to 2.21%.
- The DXY to move up from the 97.20s to a high of 97.56.
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