USD/JPY stable at 107.00 handle amid risk-on mood

The USD/JPY has traded mainly sideways in Tuesday’s trading. The bears tested last week’s open at 106.94 but were unable to close below it maintaining the pair supported at the 107.00 handle.

Earlier in the day, Fed’s Evans made some hawkish comments saying: “The U.S. Economy is firing on all cylinders” and “ the Fed can raise rates gradually without risk of inflation surge.” More details here.

Wednesday will see three Fed officials’ speeches throughout the day. 

The US dollar strengthened as investors decided to focus on the stellar corporate earnings on Wall Street. The three main indices, the S&P 500, the Dow Jones and the Nasdaq jumped higher on Tuesday breaking key technical levels. The US Dollar Index found a floor at 89.23 in the early European session and is now trading close to the 89.50 level. Supporting the buck is also John Williams, San Francisco Federal Reserve President, who earlier in the day in a speech said that he sees median interest rates in the US hovering between 3% and 4% by 2020. Further collaborating to USD strength were the better-than-expected US housing and industrial data released earlier. The market is temporarily putting aside worries of trade wars and potential Russian sanctions (those ones are for now on hold according to the latest news).

Further on, Japanese low-tier macroeconomic data is expected at 23:50 GMT with imports/exports numbers and the Merchandise Trade Balance which are not considered market movers.

USD/JPY 4-hour chart

Immediate support lies at 106.87 (low of the day) and then at 106.61 swing low while resistance is seen initially at 107.41 swing high and then at 107.79 swing high.