|

USD/JPY sticks to a tight Tokyo-open range ahead of the Fed

  • USD/JPY in a tight range on the 108 handle ahead of the Fed.
  • USD/JPY's resistance up in the 109.30's are in focus.

USD/JPY is steady in the Tokyo open on Tuesday, having been in a chop overnight in the los 108s before scoring a fresh high in the 108.37 earlier. It was not a particularly eventful session overnight as markets get set for the Federal Reserve interest rate decision, but the Dollar was on the back foot for the best part of the day.

As for yields, the US 2-year treasury yield fell from 1.76% to 1.73%, while the 10s fell from 1.84% to 1.81%. "The FOMC meeting has started and will announce its decision in around 24 hours’ time, a 25bp cut widely expected. Money market rates have risen recently, though, causing the Fed to inject cash into the system overnight using treasury repos for the first time since 2008," analysts at Westpac explained. 

Trade relations improving

Meanwhile, US industrial production climbed 0.6% in August against the 0.2% median expectation which was the largest monthly gain since August 2018. In other related news, an ‘initial’ trade agreement between the US and Japan has been agreed. "Trump advised Congress that this initial deal would be signed in the coming weeks. Details are yet to be released as to what this deal entails but agriculture products are expected to feature,"  analysts at ANZ Bank explained. 

"There is also a glimmer of hope US relations with China will improve. Trade delegates will return to the negotiating table on Thursday for their 13th round of talks. Soybean exports to China have resumed with the USDA advising yesterday 260,000 tonnes of soybeans have been sold to China this month."

USD/JPY levels 

USD/JPY's resistance up in the 109.30's are in focus. "Short-term the cross is likely to consolidate a little around the 50% retracement at 108.43," analysts at Commerzbank explained.  

Valeria Bednarik, the Chief analyst at FXStreet explained that the USD/JPY pair is neutral-to-bullish in the short term also, according to the 4 hours chart:

"It spent the day consolidating just above a mild-bullish 20 SMA, while technical indicators hold above their midlines, but without directional strength. The same chart shows that the 100 SMA advances above the 200 SMA, both below the 107.00 level. The pair could find some directional momentum with the Fed, with the bullish case set to remain in place as long as it holds above 107.45. The natural bullish target is August high at 109.31, although the Fed´s decision is in the way, and could well be a game-changer for the dollar."

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD rebounds after falling toward 1.1700

EUR/USD gains traction and trades above 1.1730 in the American session, looking to end the week virtually unchanged. The bullish opening in Wall Street makes it difficult for the US Dollar to preserve its recovery momentum and helps the pair rebound heading into the weekend.

GBP/USD steadies below 1.3400 as traders assess BoE policy outlook

Following Thursday's volatile session, GBP/USD moves sideways below 1.3400 on Friday. Investors reassess the Bank of England's policy oıtlook after the MPC decided to cut the interest rate by 25 bps by a slim margin. Meanwhile, the improving risk mood helps the pair hold its ground.

Gold stays below $4,350, looks to post small weekly gains

Gold struggles to gather recovery momentum and stays below $4,350 in the second half of the day on Friday, as the benchmark 10-year US Treasury bond yield edges higher. Nevertheless, the precious metal remains on track to end the week with modest gains as markets gear up for the holiday season.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid bearish market conditions

Bitcoin (BTC) is edging higher, trading above $88,000 at the time of writing on Monday. Altcoins, including Ethereum (ETH) and Ripple (XRP), are following in BTC’s footsteps, experiencing relief rebounds following a volatile week.

How much can one month of soft inflation change the Fed’s mind?

One month of softer inflation data is rarely enough to shift Federal Reserve policy on its own, but in a market highly sensitive to every data point, even a single reading can reshape expectations. November’s inflation report offered a welcome sign of cooling price pressures. 

XRP rebounds amid ETF inflows and declining retail demand demand

XRP rebounds as bulls target a short-term breakout above $2.00 on Friday. XRP ETFs record the highest inflow since December 8, signaling growing institutional appetite.