- USD/JPY has been on the back foot and broke trend-line resistance as risk appetite returns to the markets.
- US Treasury yields were also on the rise and the benchmark for the 10-year Treasury note climbed to 3.18% intraday.
USD/JPY bulls were taking back charge on Tuesday in overnight markets and they remain so in Tokyo it would seem with the Asian stock taking their cues from a solid performance on Wall Street as the Nikkei consolidates the recent recovery and lays out constructively bullish. USD/JPY has been making ground to 23.6% of the recent sell-off from the 114 handle which took the pair above the hourly Cloud and 100-HMA for the first time since Oct 4th.
Eyes will stay on US stock and should they continue to recover, the yen will likely be saying ‘sayÅnara’ to levels below the 112 handle vs the greenback while under pressure while US yields can likely remain elevated as investors pile back into the stock markets and out of quality seeking a return on their otherwise idle capital.
FOMC minutes preview
Analysts at nomura explained that the September FOMC meeting held few surprises as the Committee raised the federal funds target range 25bp to 2.00-2.25%, the third hike of 2018.
- “However, the minutes will likely provide important context for some of the decisions the Committee made in September, including the choice of dropping the “accommodative” language in the post-meeting statement.”
- “Recent FOMC meeting minutes have been more interesting than expected, highlighting longer-term topics such as alternate monetary policy frameworks and the balance sheet. We expect the minutes for the September meeting to emphasize the Committee’s expectation of another rate hike in December, the fourth of 2018.”
- “In addition, we will pay particular attention to the discussion around the appropriate path of policy in 2019, given the dispersion in participants’ forecasts, along with discussions on the neutral rate and whether a restrictive monetary stance will be appropriate to slow the economy.”
USD/JPY levels
- Support levels: 111.90 111.50 111.20
- Resistance levels: 112.30 112.60 113.00
Valeria Bednarik, chief analyst at FXStreet explained that the pair remains in a two-week decline and not yet out of the woods:
“the pair is struggling around last week’s close, still unable to enter bullish ground for this one. In the short term, and according to the 4 hours chart, the upside seems limited, as the pair is developing for a third consecutive day below its 200 SMA, while the 100 SMA stands some 100 pips above the current level, as technical indicators head nowhere around their midlines, leaving a neutral-to-negative stance in the short term.”
Share
