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- USD/JPY bulls made the first move in the Tokyo open, with the price popping 15 pips from a low of 111.13.
- The pair made a high of 111.35 in Asia yesterday, right around the 30-D SMA and 20/30 pips below the Ichimoku cloud up at 110.65-111.62.
USD/JPY was supported down at the 38.2% of the August 22-24 rise at 110.93 but stuck to a tight range due to a cross-current of various headlines and on mixed feelings for the greenback. The global trade risk is a two-sided coin and can be seen as a positive for risk and hence derisking plays hurting the yen but the uncertainties, on the other hand, can also favour the greenback.
However, for the time being, the US dollar is buoyed by a rise in US yields as markets discount the many uncertainties around global trade and figure that the handshake deal done with Mexico yesterday was progress made – Therefore, the Fed can continue hiking rates without interruption.
Bullish US data
Similarly, the U.S. data was bullish overnight and U.S. benchmarks remain robust close to all-time highs. The Consumer confidence improved in August, rising 5.5pp to 133.4, above expectations (Consensus: 126.6), and the highest reading since October 2000. Markets will now focus on the second print of U.S. Q2 GDP tonight amid a slow session for economic data, where consensus looks for a modest downward revision to 4.0% from the initial 4.1% – Pending home sales are the only other release and are expected to rise 0.3% m/m.
USD/JPY levels
Valeria Bednarik, chief analyst at FXStreet explained that the pair maintains a mildly bearish tone, as attempts to recover ground were again contained between the 200 SMA in the 4 hours chart, currently at 111.30, and the highs from last week at around 111.50:
“In the same chart, indicators hold around their midlines with no clear directional strength. The 100 SMA heads modestly lower below the weekly lows, at around 110.85, offering a short-term dynamic support.”