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  • USD/JPY:  Bulls are buying in on the indications that the Trump-Kim summit would take place after all.
  • USD/JPY: technicals lean bearish; The pair settled below its 200 DMA.

USD/JPY started out in Asia on Monday jumping to a high of 109.82 having closed the NY session at 109.38 in a bullish opening gap. Bulls are buying in on the indications that the Trump-Kim summit would take place after all. Currently, USD/JPY is trading at 109.61 with bears testing the downside session’s support.  

USD/JPY has continued on the advance and in the correction of Thursday’s geopolitical and Fed Minutes driven lows and catches a fresh bid on news that Trump said that there is still a chance of the June 12th  North Korea summit taking place. At the same time, the electronic indexes in the DJIA and S&P are pointing to a higher open when markets in the US return after the holidays with the Nikkei leading the pack in Tokyo today.  

As for yields, the US 10yr treasury yield fell from 2.99% to 2.92% – a three-week low – while 2yr yields fell from 2.52% to 2.47%.  We also had some Fed comments that came from Chair Powell, explaining that forward guidance may have a smaller role in future; and Kaplan also crossed the wires and said that normalizing rates gradually is appropriate.

“A team of U.S. officials crossed into North Korea on Sunday for talks to prepare for a summit between President Trump and Kim Jong Un, as both sides pressed ahead with arrangements despite the question marks hanging over the meeting, “

the Washington Post has reported.  

The week ahead

Meanwhile, for the week ahead, traders will be getting set for nonfarm payrolls. But before then, we have ADP private employment, Wednesday, and also Q1 GDP, second estimate on the same day. The dollar is firmly bid and the trend shows little sign of correcting currently, underpinned by the notion that the Fed will be raising rates again as soon as next month, (Fed fund futures yields slipped a little further on Friday, but still predict a rate hike in June, with another by year-end).  

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that from a technical point of view, the pair settled below its 200 DMA, while technical indicators entered bearish territory straight from overbought levels.  

“In the 4 hours chart, the pair is trading between its 100 and 200 SMA, with the largest offering support at 109.10, while the Momentum indicator losses upward strength below its mid-line and the RSI stands pat around 39, all of which favors a downward extension on a break below the mentioned support,” Valeria explained.