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  • USD/JPY has a a limited bullish potential at the time being.
  • Overall, the USD is the best performing G10 currency.

USD/JPY is flat in the open in Tokyo today, having been pulling  back from its highs around 108.15 last week on the China jitters. USD/JOY currently trades at 107.94 and was a pip over the line at 108.01 earlier. The low has been a mere 107.85 as markets soak up the fundamentals.

the moversr on Friday were in yields. The US 2-year  treasury yields followed equities lower though, from 1.68% to 1.63%, and the 10’s  moved from 1.72% to 1.68%. Markets are pricing 9bp of easing at the 31 October meeting and a terminal rate of 1.16% (vs 1.88% currently).

Dollar focus

Overall, the USD is the best performing G10 currency on a 1-day view. “Since the current impeachment process is likely to stumble in the Republican held Senate, it is likely that the market will continue to focus more on the issue of US/Sino trade wars in the coming weeks that the politics surrounding Trump and Biden. The impeachment process may distract attention away from the normal business of government in the near-term. On balance, this is likely to increase risk appetite which could leave the USD well supported,” analysts s at Rabobank explained.  

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet notes that the daily chart for the USD/JPY pair shows that the pair has settled just above its 100 DMA, while the 20 SMA maintains its bullish slope below the larger one. “The Momentum indicator, however, has continued to retreat from overbought readings, heading south just above its 100 line, while the RSI indicator is directionless at around 56, indicating a limited bullish potential at the time being.”