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  • USD/JPY has remained steady in the opening hour of Tokyo today.
  • USD/JPY is trading between a range of 110.72/47 while the 10-hr SMA caps the bullish attempts in a risk-off market that has supported the yen and bonds, forcing US yields lower on an exodus of US stocks overnight.  

The US 10yr treasury yields fell from 2.90% to 2.84% overnight when equities sank, eeking out a close around 2.86% while the 2yr treasury yield fell were weighed down to 2.63% to 2.59%.  Traders continue to act with an air of caution over the contagion risks in the emerging markets and the rise in the US dollar while the Fed fund futures yields continued to price almost 100% chance of a hike on the 26th September.  

Meanwhile, the US dollar has traded between 96.7100-96.7650 in Asia so far and leans with a bullish bias following the Q3 US data that portrayed a solid growth picture where US retail sales rose 0.5% in July. The retail “control group”, which feeds straight into GDP calculations, was also solid at 0.5% though the prior was revised down to a small decline (0.1%). However, ” the prior month was revised lower to show a more subdued 0.2%, from an initial estimate of 0.5%. Nine of thirteen sales categories posted gains, underscoring breadth,” as analysts at Westpac explained.  However, its now all a dollar leg story in USD/JPY. AUD/JPY (lowest since 2016 and EUR/JPY (close to 2018 low) are weighing and are good indication for USD/JPY.

USD/JPY levels

There is a bearish engulfing candle which now threatens Thursday’s 110.37 cloud base. On a break there, the July low, and 61.8% of May-July rise along with the 100- & 200-DMAs are at 110.10/110.05/109.90.

Valeria Bednarik, chief analyst at FXStreet explained From that the 4 hours chart shows that the pair struggled around its moving averages, unable to surpass them, indicating that bears are still stronger than bulls: “Technical indicators retreated from their recent highs, with the Momentum bouncing from its mid-line, but the RSI currently at around 44, this last skewing the risk toward the downside.”