USD/JPY: knocking on the 111 the figure, testing exporter’s offers territory

• USD/JPY bulls looking into the 11 handle.
• “The pair would need to extend its gains beyond 111.10 to be able to continue rallying”.

USD/JPY is currently trading at 110.97, knocking on the doors of the 111 the figure once again where corporate exporter offers are sighted, holding up the pace of the attack. USD/JPY has so far made a high of 111.00 from an early Asian low of 110.83.

• Wall Street closes substantially higher as earnings season looms

Trade overnight was risk-on, as investors take profits on the tariff news instead of running for cover. USD/JPY subsequently rallied from 110.40 in London following a strong performance in China and a modest upside in European bourses, (despite the Brexit angst), and more supply arrived in the yen when NY traders came online as Wall Street rallies by three digits in the DJIA, up over 320 points. However, overall, the dollar was mixed, (DXY 93.7130-94.2060).  

Firming US yields props the pair up for a test of the 111 handle

Additionally, firming US treasury yields added to the pairs northerly trajectory – the benchmark US 10yr treasury yield climbed from 2.84% to 2.86% while 2yr yields rose from 2.55% to 2.57%. The Fed fund futures yields continued to price 1 ½ more hikes in 2018.  

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the short-term outlook for the pair is bullish:

“It managed to hold above a directionless 100 SMA, while technical indicators entered positive territory, maintaining their bullish slopes at their highest in over a week. The pair would need to extend its gains beyond 111.10 to be able to continue rallying, eyeing initially 111.40, May’s monthly high.”