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  • USD/JPY is better bid in the Tokyo session and is testing the 111.40 zone with a high so far at 111.43 from a low of 111.16.  
  • All eyes turn to CPI after a risk-on day subsequent of trade war talk.  

From overnight, the yen was pretty subdued actually. There had been some action in the commodities whereby investors were encouraged by the trade war noise and progress being made on NAFTA and noise that China and the US would perhaps engage in trade talks again soon.  

As a result, the CAD and antipodeans sard – as did the Lira. USD/JPY traded between 111.58/10 throughout Europe and the US. US yields were lower and the Beige Book was mixed, although underpinned the notion of further rate hikes from the FED.  

US inflation preview: Expect a straightforward USD reaction, Fed may find its limits

The PPI data missed but the key input will come from the CPI data – expected to remain unchanged in August – Bulls need a 111.88+ close while bears need sub -100-DMA (110.60) close.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that technically, the pair faltered at the upper end of its latest range, holding above the 111.00 level:

  “In the 4 hours chart, above its 100 and 200 SMA, both converging within a tight 10 pips range. Technical indicators in the mentioned chart have turned sharply lower, with the RSI already within negative territory, currently at 46, supporting additional declines ahead. The 110.90 region is the immediate support, with a break below if opening doors for a steeper decline toward the 110.20/30 region.”

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