- USD/JPY: yen plays catch up with falling stocks, US yields and the DXY.
- USD/JPY: the Fed and geopolitics will be the key theme from G7 commencing Friday, risks mount into next week.
USD/JPY is dropped after too many failed attempts at the 200-D SMA, but crucially, the pair has dropped below 109.75, a prior Kijun line that had held as a key resistance and support in recent sessions). The markets are seeking equilibrium and the 10-year yields were on their knees in NY, trading to as low as 2.94 from 2.99 highs, pulling DXY down.
However, US stocks have come off their highs, with the benchmarks now negative on the day as we head towards key geopolitical events, starting tomorrow with the G7 where trade war noise will likely pipe up and then the N.Korea / US summit scheduled for the 12th June; (BOJ’s Kuroda has called for ‘rational’ G7 debate on trade). Of course, the FOMC and BoJ will be ones to watch as well.
N.Korea remains a key a concern
Wires have been recently crossing where Trump has said there will be no deal if they do not give up their nuclear programme, repeating that this is not about a one and done meeting, (raising fears that this threat will not go away overnight).
USD/JPY levels
With the pair falling below 109.70/80, stops have been tripped and the pair has fallen t as low as 109.58. However, the key downside target remains the 108.50 level and the market can consolidate between here and there, lacking conviction one way or the other. The 200-D SMA guards the breakout point at 110.60 that guards a break to 111.39 as the recent high ahead of key resistance at the 112.11 2015-2018 downtrends. On a break below 108.50, the 50% retracement at 107.97 and the mid-February high at 107.91 could be solid supports ahead of a run to the base of the cloud down at 107.41.
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