- USD/JPY was quiet in Asia due to Japan’s Labour Thanksgiving holiday on Friday.
- In the NY session, the pair rolled over on stocks in decline.
- USD/JPY is sitting around 50% of the recent Oct lows and Nov highs following a round-trip price performance in NY Friday, currently trading at 112.93, from a high of 112.98 and a low of 127.92.
USD/JPY was in a round trip on Friday following a run to safety with stocks in decline with US traders having returned from Thanksgiving holiday in a risk-averse mood. The Dow and the S&P500 were both down 0.7%, and the Nasdaq down 0.5%. (Oil prices also collapsed on Friday night, with WTI down 7.7% and Brent down 6.1%).
The dollar remains firm despite dip in US yields
As for US yields, the US 10yr treasury yield dropped from 3.07% to 3.04%, while 2yr yields moved in a slightly lower range of between 2.80%-2.82%. The Fed fund futures continued to price the chance of the next rate hike on 19 December at 75% and the dollar reached highs just shy if the 97 handle.
The week ahead
For the week ahead, markets will carefully watch whether or not Fed Chair Powell signals concern about headwinds or a potential pause in policy while also keeping a close eye on Brexit where focus has now shifted to London where the PM will push for MPs to approve her deal in early-Dec.
It is impossible for Brexit to pass at the moment, 91 Conservative MPs are against the Agreement
USD/JPY levels
- Support levels: 112.70 112.30 112.00
- Resistance levels: 113.10 113.35 113.70
From a technical point of view, Valeria Bednarik, Chief Analyst at FXStreet explained that the pair is neutral, although with the downward potential limited:
“It keeps developing above a mild bullish 100 DMA, currently at 112.15, while the 200 DMA also grind higher roughly 200 pips below the shorter one. Technical indicators in the mentioned chart, however, lack directional strength, consolidating right below their midlines. In the 4 hours chart, the pair finished above a mild bearish 200 SMA and below the 100 SMA, while technical indicators are attempting to bounce from their midlines, although lacking enough strength to confirm additional gains ahead. The pair would need to surpass 113.35 to be able to extend its gains, while below 112.30, the risk will skew to the downside.”
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