USD/JPY: Consolidating around 5-day MA after rejection at 110.00

• USD/JPY failed to clear 110.00 yesterday, possibly due to 10-year yield surrendering early gains.  
• The pair is currently trading around the 5-day moving average (MA) of 109.58.
• Focus on Senate vote to end the government shutdown

The USD/JPY pair is currently trading around the 5-day MA of 109.58, having hit a high of 110.00.  

The Bank of Japan (BOJ) kept key policy tools unchanged yesterday and revised lower its inflation and growth forecast, reinforcing the view that the central bank is unlikely to scale back the unprecedented stimulus any time soon.  Further, the US 10-year treasury yield ticked higher to 2.77 percent.  

USD/JPY, therefore, jumped to 110.00 yesterday. The psychological hurdle, however, proved a tough nut to crack, possibly due to the pullback in Treasury yields.  The 10-year yield surrendered gains and ended largely unchanged on the day at 2.73 percent.  

Focus  on Senate vote

The Senate is expected to vote today on a Republican measure incorporating Trump’s $5.7 billion demand for  US-Mexico border wall and a short term spending bill from the Democrats that would help reopen the government until February 8th.

Kathy Lien from BK Asset Management believes the vote will likely fail as neither party has a majority and both resist the other’s proposals. The USD will likely find bids if the vote succeeds in ending the 34-day-long government shutdown.  

USD/JPY Technical Levels