- USD/JPY is winding up for a breakout within the symmetrical triangle.
- Trade talks and Brexit noise raising hopes of a breakthrough, US stocks and risk on the up.
USD/JPY is currently trading better bid in Tokyo, opening in the Japanese markets at 110.77, up to a high of 110.86 from an early 110.64 low. Risk is on at the start of the week, following Friday’s New York closing mood as US President Trump is reported to be offering an extension to the March 1 trade talks deadline. There had already been a positive sentiment on Friday, and U.S. stocks ended around their best levels on Friday, with marking its loftiest close since early November amid continuing hopes for a trade deal between the U.S. and China – (The Dow Jones Industrial Average added rose 181 points, or 0.7%, at 26,032, while the S&P 500 index advanced 0.6% to end at 2,793. The Nasdaq Composite Index ended higher 0.9% at 7,528. This was the first time since 1964 that the indexes rose in the first 8 weeks of a calendar year).
Brexit noise
In other noise, Theresa May is not talking about extending article 50, but she may have no choice which is also a boost to risk. The BBC reported today that MPs will be able to have a fresh vote on the Brexit deal by 12 March, Prime Minister Theresa May has said. “Speaking as she travelled to an EU-Arab League summit in Egypt, Mrs May ruled out holding another so-called “meaningful vote” this week. But she said “positive” talks with the EU were “still ongoing” and leaving on 29 March was “within our grasp”.”
Meanwhile, as far as The US 10yr treasury yields went, they fell from 2.68% to 2.65%, while the 2yr yield fell from 2.52% to 2.49%, partly in response to dovish Fedspeak.
“There were plenty of Fed comments from FOMC members at a monetary policy forum on Friday, mostly with a dovish tone,” analysts at Westpac explained: “Bostic said policy is at a crossroads, Williams was worried about the persistent undershoot of its 2% inflation target, Daly said cyclical inflation pressures are not apparent, Clarida said neutral interest rates appear to have fallen in the US and abroad, and Quarles preferred to maintain ample reserves in its balance sheet.”
USD/JPY levels
The pair is winding up within the symmetrical triangle and is due a breakout. Valeria Bednarik, the Chief Analyst at FXStreet, explained that the daily chart shows that the pair has consolidated below its 100 and 200 SMA, with the shortest approaching the larger one from above, suggesting decreasing buying interest:
“Technical indicators in the mentioned chart eased within positive levels, supporting the view. Shorter term, and according to the 4 hours chart, the pair keeps developing above bullish moving averages, while technical indicators pared losses below their mid-lines and bounced modestly, although it’s not enough to confirm additional gains ahead.”
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