- USD/JPY has started out in the Tokyo day tucked in below the 21-hr SMA.
- USD/JPY consolidates in motionless markets.
USD/JPY slipped -0.2% to 113.20 overnight where the dollar was on the backfoot following bullish sentiment surrounding Sino/US trade relations which boosted riks and US stock markets spurring on paring back of both speculative and safe haven longs in the greenback.
In data, the US consumer prices were steady in November, lower gasoline prices keeping a lid on the headline. "The core CPI rose a firmer 0.2% with the annual pace at 2.2% from 2.1%. This was right in line with consensus. Real average hourly earnings continue to firm, the annual rate hitting 0.8%, its strongest since mid-2017," analysts at Westpac noted.
As for the US treasury yields, the 10yr treasury yield rose from 2.88% to 2.90%, while the 2yr yield was little changed, around 2.77%. The curve between the 2yr/10yr treasury approaching single digits as investors continue to bring forward end of the economic cycle which is ultimately a thorn in the dollar's side and a spanner in the works for the bulls. Fed funds rate futures continued to price the chance of a rate hike next week around 75%. Beyond that, a March rate hike is given only a 20% chance.
USD/JPY levels
- Support levels: 113.10 112.90 112.55
- Resistance levels: 113.70 114.00 114.40
Valeria Bednarik, Chief Analyst at FXStreet explained that from a technical point of view, the pair offers a neutral-to-bullish stance:
"In the 4 hours chart, buyers are defending ground around mild bullish 100 and 200 SMA, both converging a handful of pips below the current price. Technical indicators in the mentioned chart have retreated from their daily highs near overbought levels, but the downward strength eased well into positive ground, indicating quite limited selling interest. The upside will look more constructive on a recovery above 113.70 a strong static resistance level."
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