Search ForexCrunch
  • USD/JPY is a lot steadier today, although risks lurk around each corner as geopolitical tensions ramp up on a global scale.  
  • USD/JPY is currently trading at  110.75 between a range of 110.59 and 110.85.

We had a brief scare on trade comments from Mnuchin and Lighthizer which sent the yen on a tear in early Asia, down to the aforementioned lows from a touch away from 111 the figure while markets stay on red alert despite sentiment that a deal will be struck at the eleventh hour.  

There was a bounce in risk as investors took the initial Sunday comments from Trump’s Tweet which was taken as a pinch of salt in U.S. markets, underpinned by the updates posted by the South China Morning Post reporters that China is still preparing to send a delegation to Washington for the trade talks despite the latest threats by  Trump to increase tariffs, Foreign Ministry, quoting spokesman Geng Shuang overnight – USD/JPY rose from 110.60 to 110.96 before the Lighthizer comments. As a result, the dollar ended flat in the U.S session while the US 10yr treasury yield rose from the 5bp lower open at 2.48% by 2bp to 2.50% while the 2yr yield opened 4bp lower at 2.28% and moved up to 2.31%.  

On the geopolitical front, it is worth keeping an eye on the following:

  • Pompeo: Sees possible ‘escalation’ from Iran – RTRS

  • Pentagon says U.S. carrier, bombers sent to Middle East on ‘credible threat’ by Iran – RTRS

  • Turning the knife: Pompeo said China is entitled to “exactly nothing” in the Arctic – Bloomberg

USD/JPY levels

Valeria Bednarik, Chief Analyst at FXStreet explained that the pair has spent most of the last two sessions consolidating around the 110.80 level:

“The pair has spent most of the last two sessions consolidating around the 110.80 level, maintaining the bearish tone according to the 4 hours chart, as it is developing well below its moving averages, and with the 20 SMA gaining bearish traction below the larger ones. In the mentioned chart, technical indicators have bounced from the extreme oversold territory but turned flat well into the negative ground, indicating absent buying interest. The upside would look a bit more constructive if the pair manages to advance beyond 111.10, where it closed last week.”