USD/JPY’s correction stalls and price trickcls back below the hourly cloud

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  • USD/JPY is currently trading at 109.43, -0.15% so far in Asia, between a low of 109.39 and a high of 109.59. 
  • USD/JPY is better offered in a risk-off environment, trading around the hourly cloud, capped at prior day’s highs.

Risk FX remains on the back foot, despite attempts to correct in the US session. The yem which tracks the yield spread closely between the US and Japan was picked up at a discount in the US after falling when U.S. yields were stabilizing in New York. The US 10 year treasury yield dropped from 2.42% to 2.36% and the 2yr yield fell from 2.21% to 2.14% until the tariff news caused both to recover a few bps.

The news that the U.S. would postpone by 180 days a decision on tariffs on EU and Japan car imports, as well as the noise of a U.S. delegation being assigned to a trip to Beijing to continue trade talks, helped lift spirits on in North America with stock benchmarks bouncing off their opening lows. 

Yen weakens in NY following a bounce in U.S. stocks

  • The DJIA, added approximately 116 points or 0.5% to 25,648.
  • S&P 500, added 0.6% or around 17 points higher to 2,851.
  • Nasdaq Composite index climbed 1.1%, or 88 points, to 7,822.

USD/JPY levels

The pair is trading around the hourly cloud, capped at prior day’s highs. Overnight, Valeria Bednarik, the Chief Analyst at FXStreet, explained that in the 4 hours chart, it shows that the Momentum indicator extended into bullish ground, but that the pair is unable to advance beyond a bearish 20 SMA:

“The RSI indicator,” also, “hovers around 45, losing upward strength, all of which limits possibilities of a steeper recovery. Given that the pair is also overbought in the daily chart, and upward corrective movement couldn’t be dismissed yet the pair would need to move firmly above 110.10 to shrug off the negative stance, at least short-term.”

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