USD/JPY continues to move sideways around 108.00

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  • USD/JPY moves up and down in a narrow band on Wednesday.
  • 10-year US T-bond yield is clinging to small daily gains.
  • Wall Street’s main indexes remain on track to snap two-day losing streak.

After starting the week on the back foot and suffering heavy losses on Monday, the USD/JPY pair has gone into a consolidation phase and continues to have a difficult time making a decisive move in either direction. As of writing, the pair was unchanged on the day at 108.08.

The US Treasury bond yields stay relatively quiet on Wednesday, allowing USD/JPY to extend its sideways grind. The benchmark 10-year US Treasury bond yield largely ignored the 20-year note auction, which saw the high yield falling to 2.144% from 2.29%, and was last seen posting small gains at 1.561%.

In the meantime, following a two-day correction, Wall Street’s main indexes gained traction on Wednesday and made it difficult for both the JPY and the USD to find demand as safe-haven assets. Currently, the S&P 500 Index is up 0.6% on the day at 4,159 and the US Dollar Index is losing 0.06% at 91.15.

There won’t be any macroeconomic data releases featured in the Japanese economic docket on Thursday. Later in the day, investors will keep a close eye on the US Department of Labor’s weekly Initial Jobless Claims data.

USD/JPY outlook

Credit Suisse analysts think USD/JPY could push lower toward the ascending line coming from January at 107.56 with a break below 107.82/77 support area, which is formed by the 38.2% retracement of the Q1 rally and 55-day moving average. 

“Immediate resistance is seen at 108.30/32, then the ‘neckline’ to the top at 108.59/69, with 109.10 needing to cap to see the top and our now tactical bearish outlook maintained,” analysts further note.

Additional levels to watch for

 

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