USD/JPY tracks yields to snap two-day uptrend around 113.50 despite weaker Japan Q3 GDP

USD/JPY steps back from weekly top, refreshes intraday low.
US Treasury yields drop, stock futures dwindle as geopolitical headlines weigh on previous optimism.
Japan Q3 GDP came in softer, Tankan Survey portrays optimism for December.
Qualitative catalysts will be important for clear direction amid a lack of major data/events.

Anil Panchal FXStreet

USD/JPY stays pressured around the daily bottom of 113.35 as markets in Tokyo open for Wednesday. In doing so, the yen pair declines for the first time in two days, down 0.05% of late, as fresh challenges to the sentiment weigh on US bond coupons.

Among the key-risk catalysts are the geopolitical tensions between Washington and Kremlin, as well as the US-China tussles. Adding to the sour sentiment could be the chatters surrounding the fears of Chinese real-estate companies’ default.

US President Joe Biden warns Russia of sanctions and would help Ukraine with military power if Kremlin invades Kyiv. “The Biden administration is in ‘intensive consultations’ with the new German government over its response if Russia invades Ukraine and believes Germany would be ready to take significant action if Russia launches an attack, a senior U.S. State Department official said on Tuesday,” said Reuters.

Further, the US boycott of the 2022 Beijing Olympics doesn’t bode well with China as the dragon nation hints at consequences due to the same. Additionally, the market’s optimism also fades amid doubts over China’s struggling real-estate firms’, Evergrande and Kaisa, capacity to pay the looming debt after barely paying the interests.

It’s worth noting that Japan’s optimism for more stimulus and receding fears of the South African coronavirus variant, dubbed as Omicron keep USD/JPY buyers hopeful. On the same line is China’s readiness for safeguarding the financial system from default and covid risks.

Talking about data, Japan’s Q3 GDP dropped below -0.8% initial forecast to -0.9% while Tankan Manufacturers’ survey for December was quite optimistic, citing manufacturers’ gauge refreshing four-month high.

While portraying the market mood, the US 10-year Treasury yield snaps a two-day uptrend around 1.47%, down two basis points (bp), whereas S&P 500 Futures struggle to follow its Wall Street benchmark that rallied the most since March.

Given the lack of interesting data/events on the calendar, risk-related headlines are important for the USD/JPY traders to watch for fresh impulse.

Technical analysis

Tuesday’s Doji below 20-DMA level of 113.95 directs USD/JPY towards the previous resistance line from March, around 112.60 at the latest.

Additional important levles

Overview
Today last price	113.46
Today Daily Change	-0.02
Today Daily Change %	-0.02%
Today daily open	113.48

Trends
Daily SMA20	113.97
Daily SMA50	113.49
Daily SMA100	111.71
Daily SMA200	110.59

Levels
Previous Daily High	113.78
Previous Daily Low	113.4
Previous Weekly High	113.96
Previous Weekly Low	112.53
Previous Monthly High	115.52
Previous Monthly Low	112.53
Daily Fibonacci 38.2%	113.64
Daily Fibonacci 61.8%	113.55
Daily Pivot Point S1	113.33
Daily Pivot Point S2	113.18
Daily Pivot Point S3	112.95
Daily Pivot Point R1	113.71
Daily Pivot Point R2	113.94
Daily Pivot Point R3	114.09

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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