USD/JPY seesaws around 112.00 as Tokyo open got fewer risk drivers to follow


  • Risk-on remains favorite amid trade positive news but lack of fresh directives confines market moves.
  • 112.15/25 can continue to act as an important upside resistance.

The USD/JPY pair trades little changed around 112.00 as Tokyo markets open on Tuesday. The quote remained positive on Monday due to overall risk-on sentiment but is little changed off-late as backed by fewer catalysts. While news reports from the US-Japan trade discussions could offer background music to the pair traders, the US industrial production and developments surrounding the US-China trade deal could offer additional details to entertain market players.

With an upbeat start to the US earnings season and welcome China data, global investors remained mostly optimistic on Monday. Though, lack of major catalysts confined the moves.

Japan’s Economy Minister Toshimitsu Motegi is on the two-day visit to Washington in order to discuss trade with the US Trade Representative Robert Lighthizer. There hasn’t been any negative report rolled out so far at the end of the first day of the talks, which in turn could be a reason for the recent uptick of the USD/JPY pair.

However, latest comments from the Fed policymakers, like Federal Reserve Bank of Chicago President Charles Evans and Federal Reserve Bank of Boston President Eric Rosengren seemed quite unimpressive. Both the FOMC members supported the central bank's cautiously neutral bias whereas Mr. Evans accepted that the US inflation was weaker than expected while Mr. Rosengren said that the economy has slowed but the recession is unlikely.

It should also be noted that Monday’s Wall Street result offerings couldn’t please the bulls as Goldman Sachs and Citigroup registered weak revenue numbers.

The US 10-year treasury yield, mostly referred to gauge market risk sentiment, was unchanged near 2.56% during the press time.

Moving forward, optimism surrounding the trade deals between the US and China, coupled with the US and Japan, could help the USD/JPY afloat while expected increase in March month industrial production to 0.2% from 0.0% (revised) may further support the upside. Though, negatives could be well received in times of market inactivity.

USD/JPY Technical Analysis

112.15/25 area comprising March high and the early December 2018 lows could act as important upside resistance for the pair, a break of which can further propel prices towards 112.80 and 113.00.

On the flipside, 111.80 and 200-day simple moving average (SMA) level around 111.50 can limit the quote’s near-term declines whereas 111.00 and 100-day SMA level of 110.90 might entertain sellers afterward.

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