- Bulls losing control on the 110 handle as trade war angst persists.
- USD/JPY needs to maintain a bid above the 200-D SMA.
USD/JPY is currently trading at 110.02 with a high of 110.29 and a low of 110.01, after a turbulent session overnight where the bulls took control from a dip below 110 the figure, all the way through the 200-D SMA to score a fresh high a couple of pips shy of the 110.50 barrier on a brief moment in relief of trade war angst.
The moment was short-lived, after comments from Larry Kudlow who stated that the Trump administration had not softened its stance on China, which was walking back comments from other officials. At the same time, there was safe-haven demand for US Treasuries that rallied by nearly 6bps in the long-end, sending US yields lower and capping the bull’s advances.
Ironically, dollar pressured on yield spread on safe-haven flows into US treasuries
However, the DXY maintained higher levels between the 94.5260-95.4170 range, (DXY best close in a year/Atlanta Fed model sees Q2 at 4.5%) As for stocks, the S&P 500 closed 0.8% lower while the DJIA fell 0.7%. While the greenback was the outperformer, although its advance was tempered by US yields dropping, notably in the benchmark US 10yr treasury yield that fell from 2.88% to 2.82% – the lowest since May, (risk-off markets see higher bond prices with eyes on China’s potential meltdown).
USD/JPY levels
Valeria Bednarik, chief analyst at FXStreet explained that the 4 hours chart shows that the pair is trading not only above the mentioned Fibonacci level but also above its 100 and 200 SMA that still lack directional strength an run parallel a few pips below it:
“Technical indicators in the mentioned chart have pulled down from near oversold readings but remain within positive levels, suggesting that the pair will likely remain within familiar levels.”
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