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USD/JPY is trading at 106.84 having been rejected at a critical 107 area, with price now moving info consolidation with bearish cards stacked against it.

At the time of writing, USD/JPY has been trading between 106.44 and 107.01. 

For the near term, there is little going for the greenback as its struggles to maintain a meaningful bid, reflected in the DXY that while holds above a two-year low hit last Thursday is down 0.3% after shedding gains made in Asian trading. 

As we head towards the last trading hours on Wall Street, the DXY trades ar 93.43 within a range of 93.27 the low and 93.91 the high. 

The dollar faces headwinds from higher equities and lack of follow-through in yields. Moderate rises in real yields are hardly the basis for a full-blown resurgence in the dollar.

It is a lower for a longer story for yields as lower real rates are the central bank lever to support the recovery and compensate for supply.

This is a theme that is not going to vanish anytime soon. Instead, it can be expected to see lower yields, more QE and dovish Federal Reserve forward guidance this autumn. 

“If there is no movement in the negotiations soon, the Fed’s concerns are quite likely to have an impact on the dollar sooner or later,” FX analysts at Commerzbank said in a noted.

Also, the trade war demand for the greenback could come undone also. 

White House economic advisor Kudlow said China was fulfilling its trade deal commitments on agricultural purchases, an encouraging tone ahead of the formal high-level review due Saturday.

As for stocks, US benchmarks lifted the most in a month on Wednesday on continued bets for more stimulus in the United States even as that was put in doubt late on Tuesday.

Recently battered technology stocks reclaimed leadership on Wall Street. The benchmark S&P 500 was again brushing against its record highs, although all may not be so fundamentally bullish in this regard as stock splits do not necessarily attract long term investment. 

Meanwhile, on the data front, stronger-than-expected US Consumer Price Index numbers briefly lifted the dollar against a basket of currencies, including the yen.

The CPI showed a rise of 0.6% last month after rebounding 0.6% in June. Excluding the volatile food and energy components, the CPI also jumped 0.6% last month. That was the largest gain since January 1991 and followed a 0.2% rise in June.

USD/JPY levels

As per yesterday’s analysis, here, and in the chart below, the pair is destined to find strong resistance in the 107 highs. 

The pair will look to a retracement back to a daily support structure if this resistance holds up tot he test of time and bullish commitments.