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  • USD/JPY oscillating in a familiar range, a break to 110.40 could be of interest to the bulls.
  • USD/JPY capped in Tokyo by 100-hr SMA and below the 111 handle still.  
  • Eyes will turn to the FOMC minutes where traders seek further clarification that June is a dead cert for an additional  25bp rate hike.  

USD/JPY has been oscillating in a familiar range around the 111.00 level and has opened in Tokyo with bullish intentions, although lacking conviction and capped ahead of the 100-hr SMA so far. Currently, the price is 1110.85 and the pair has made a high of 110.92 and a low of 110.72.

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The overnight high was 111.07 and the support of 110.85 gave way for aforementioned lows scored in early Asia as the yen plays catch up with the sour risk tone that developed toads the end of the US session. The benchmarks closed for the US session around the lows of the day while uncertainty over trade policy and other geopolitical matters remained high – (ZTE and North Korean remain up in the air).  

FOMC eyed:

Meanwhile, the dollar was oscillating at the midpoint of the 93.2910-93.7340 range while the US 10 year yields rose from 3.05% to 3.08% before slipping back to 3.06%.    Traders will seek further clarification from the FOMC minutes that June is a dead cert for an additional  25bp rate hike.  

Analysts at Nomura offered their outlook for the May FOMC minutes after the statement provided little new information for our views on the likely trajectory of policy:

“We expect that the minutes may reveal a more nuanced discussion about the changes to the inflation language in the statement (emphasizing “symmetric” and dropping “monitoring inflation closely”). Moreover, the minutes will likely show the Committee discounted the slight deceleration in Q1 real GDP growth while highlighting the positive US economic outlook. For policy, we continue to expect a total of four rate hikes this year, one more than the current SEP median for 2018. The May minutes will likely include some signal of the widely expected June hike and potentially give additional information as to whether the Committee is likely to revise up its 2018 rate forecast. For other discussions on the outlook, language on US trade policy and financial conditions will be of particular interest, especially given the slight softening of business confidence surveys over the past few weeks. Moreover, with policymakers frequently referring to a potential inversion of the yield curve after the May FOMC meeting, the minutes could show an in-depth discussion of the policy implications of an inverted yield curve. Finally, the March minutes noted a discussion about revising statement language in the future to acknowledge monetary policy would eventually move from an accommodative to neutral or restrictive stance. Combined with San Francisco Fed President Williams’ recent comments about revisiting the statement’s forward guidance language, any additional discussion on the statement in the May minutes would be of note.”

USD/JPY levels

USDJPY: Buy US$Jpy @ 110.40

Valeria Bednarik, chief analyst at FXstreet explained that the 4 hours chart shows that the price consolidating above its weekly opening and bullish moving averages, while the Momentum indicator is currently bouncing from its mid-line and the RSI hovers around 57: “All of which results in a neutral-to-bullish stance, although a break above the weekly high at 111.39 is needed to confirm another leg higher.”