USD/JPY: bulls losing grip on the 113 handle in Tokyo, ears to the ground for contested seats results (US elections)

• USD/JPY is losing its footing at the midpoint of the 113 handle as markets get set for the results of the US midterm elections.
• Below 113.00 bulls will turn more cautious.

USD/JPY has stated out in the Tokyo session on the backfoot, giving back the gains to 113.50 scored in the NY session and is currently trading at 113.29 the low so far for Asia. The pair was lofty on climbing US yields with the 10yr treasury yield rising from 3.19% to 3.22%, while the 2yr yield rose from 2.90% to 2.93%.

• Wall Street ends higher as huge voter turnout makes it tough to predict exit polls

The Fed fund futures yields repriced the chance of another rate hike in December at 80%, from 75% and US stocks remained elevated also. The Dow Jones Industrial Average rose 175.41 points, or 0.69%, to 25,637.11, the S&P 500 added 17.19 points, or 0.63%, to 2,755.5, and the Nasdaq Composite gained 47.11 points, or 0.64%, to 7,375.96.

Markets set for the results of the US midterm elections

The markets were getting set for the results of the US midterm elections that are starting to feed though currently. All 435 seats in the House and 35 of 100 Senate seats face re-election, along with many state governorships.  

Seats have been called but no contested seats have been called yet and that is where we might see some action in the markets, depending on the outcomes. The Democrats are favoured to win the House – they need just 23 seats.

USD/JPY levels

• Support levels: 113.00 112.60 112.30.
• Resistance levels: 113.85 114.10 114.55.

Valeria Bednarik, Chief Analyst at FXStreet explained that the pair seems poised to resume its advance according to intraday technical readings:

“In the 4 hours chart, the pair keeps developing above its 100 and 200 SMA, while technical indicators gain upward traction within positive levels, recovering from their midlines. The next static resistance area is 113.85, with a break above this last favoring a retest of October high at 114.54. Below 113.00 bulls will turn more cautious, while bears will take over on a break below 112.60.”