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  • USD/JPY: bulls lacking punch in Tokyo, cautious due to trade wars heating up.
  • USD/JPY:  pair continues trading well below  its 100 and 200 SMA ahead of nonfarm payrolls.

While support comes in at the hourly cluster of MAs around 108.75, USD/JPY had popped to 108.84 the high for the Asian session so far but lacks vigour Trump’s tariffs levied on his nations closet allies keeps risk at bay.  Overnight, USD/JPY ranged between 108.40 and 109.00 and finished flat on the day. 109.00 has capped bullish attempts as an exporter  hedging level, although Wednesday’s widening of the 10-yr UST/JGB spread extending overnight keeps the pair better bid on dips down to  108.39, the overnight session low.  

  • Funda-FX wrap: Italy on course to a functioning coalition government, Trump announces tariffs on closest allies

As far as data went, the Fed’s preferred inflation measure, the PCE deflator, climbed 0.2% for the month in April, on both overall and the core measure, leaving annual inflation at 2.0% and 1.8% respectively. Eyes will now turn to the nonfarm payrolls later today.

US yields remain elevated

The US 10yr treasury yield ranged between 2.82% and 2.88%, unchanged on the day at 2.85%. The Fed fund futures were continuing to predict two hikes by  year-end.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that technically, the 4 hours  chart  shows that the pair continues fighting with the 23.6% retracement of its latest daily decline:

“A more relevant resistance comes at 109.35, the 38.2% retracement of the same slide. The pair continues trading well below  its  100 and 200 SMA, while technical indicators managed to advance some, but remain below their midlines, limiting chances of a steeper recovery during the upcoming Asia session.”