- USD/JPY: stuck below key resistance on 107 handle.
- USD/JPY: markets move on from geopolitical risk, for now.
USD/JPY is not showing its hand in the open of Tokyo, albeit without much life out there and with hourly smas capping on the 107 handle. Currently, USD/JPY is trading at 107.06, down -0.06% on the day, having posted a daily high at 107.18 and low at 107.00.
- Fundamental wrap: markets reverse risk-off Friday
USD/JPY closed at 107.11 in NY on what was a much calmer trade on Monday in both the European and US sessions. On Wall Street, the focus was on corporate earnings with less angst around Syria. The yen was better bid in North America on a weaker dollar and risk-on switch up that weighed on the greenback. DXY was trading between 89.389 - 89.850, -0.41% on the day for the close. The US 10yr treasury yield initially rose to 2.86%, a one-month high, to then drop in NY to 2.83%. The 2yr yields continued in their multi-year uptrend to 2.39% and to the highest since 2008. The Fed fund futures yields are pricing in the next rate hike in June around an 85% chance.
Eyes on the week ahead
Looking ahead, we have Abe's and Trump's meeting on Tuesday while Japan will offer Industrial Production and Capacity Utilization data, seen improving from its previous readings. Stocks will also be a driver with earnings season kicking off this week.
- Wall Street: risk on with earnings, benchmarks 1% higher around 50-D SMA
- Wall Street stocks push higher and shrug-off Syria airstrike, focus on earnings, stellar Bank of America
Valeria Bednarik, chief analyst at FXStreet explained that the pair is "gaining bearish traction" in the short term:
"In the 4 hours chart, technical indicators entered negative territory with sharp bearish slopes, although given that the 100 and 200 SMA stand in the 106.30/60 region, the downside potential is limited. The pair would need to break below 106.20 to actually enter a bearish move, while steady gains beyond 108.00 should indicate further gains ahead."
" Jim Langlands, FX Charts, noted that the daily momentum indicators retain a constructive bias and the weeklies are also now turning higher but technically, he says, "buying dips still seems to be the plan."
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