USD/JPY supported at 109.20 while a bearish tone persists

Currently, USD/JPY is trading at 109.19, up -0.05% on the day, having posted a daily high at 109.38 and low at 109.19.

North Korea sparking concerns for investors again, yen to strengthen further?

Despite the N.Korea risks rearing its ugly head again this week and at the start of the FX week in Asia, USD/JPY is relatively stable in the open of Tokyo and supported at 109.19/20. 

During last week's US session, US 10yr treasury yields initially dipped from 3.20% to 2.16%, but rebounded to 2.21% following the Bannon news while equities were also able to recover some losses supporting the bid in USD/JPY. 

The week ahead - Nomura

For the week ahead, Japan's CPI will be a focus for traders, and analysts at Nomura forecast July all-Japan core CPI inflation to be 0.5% y-o-y, marking a rise from June. They also expect August Tokyo core CPI inflation to be higher than in July. For the US, the analysts expect durable goods orders on Friday to be a 0.3% m-o-m increase in July core durable goods orders (excluding transportation goods), after a 0.1% increase in June.

USD/JPY's technical position

Valeria Bednarik, chief analyst at FXStreet who expects yen strength to prevail this week, explained that on a technical basis and in the shorter term and according to the 4 hours chart, the pair is well below bearish 100 and 200 SMAs. "Technical indicators barely corrected oversold conditions before losing their upward strength, also supporting additional declines ahead," she explained, adding, "despite Friday's recovery, the pair maintains its bearish tone, given that in the daily chart, technical indicators resumed their slides after failing to regain positive territory at the beginning of the week, while the price remains well below its 100 and 200 DMAs."