- Bulls eye the 111 handle while the 4 hours chart shows that the pair is holding above its 100 and 200 SMA.
- Dips were a bargain on the back of the US manufacturing data.
USD/JPY has started out in Tokyo threating a break of the 111 handle with a fresh high of 1110.97 from a foundation of the 110.80 support level as risk sentiment has sweetened on the back of Europan politics stabilising, for now, and upbeat data from the US economy that had Wall Street scrambling back better bid into the 11th hour.
USD/JPY ended flat on the NY session overall but was better bid on elevated yields and a favourable US/Japanese spread while bulls were threatening around 110.90. Dips were a bargain on the back of the US manufacturing data; (US June ISM manufacturing index 60.2 vs 58.5 expected, Markit US June manufacturing PMI 55.4 vs 54.7 expected).
US yields and Fed outlook keep dollar underpinned
In term s of the US 10yr treasury yield, this was initially dropping from 2.86% to 2.82% in London but was bouncing to 2.87% on the US ISM data while the Fed fund futures yields continue to price in 1 ½ more hikes in 2018.
USD/JPY levels
Valeria Bednarik, chief analyst at FXstreet explained that technically, the 4 hours chart shows that the pair is holding above its 100 and 200 SMA, with the shortest aiming modestly higher in the 110.20 region:
“In the mentioned chart, the Momentum indicator eases in positive territory while the RSI holds directionless around 58, leaving a neutral-to-bullish stance in the short-term. A break through the mentioned daily high should lead to a test of 111.39, May monthly high, ahead of the 111.70/80 region, while below 110.55, a bearish extension could be expected for this Tuesday.”
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