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JPY: USD/JPY Bounces Off Lows, Focus Turns To FOMC Later

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USD/JPY rallied 1.27% to 142.41 on Tuesday, with an impressive bounce from the 139.58 lows on Monday. We trade just below Tuesday's session highs (142.62) at 142.10 as trading gets underway on Wednesday and well below firm resistance is of 143.95, the 20-day EMA.

  • The USD was support by higher US Tsys as yields closed 3-5bps higher after stronger-than-expected US retail sales, they also saw a slight upward revision to prior data (0.1% M/M (vs -0.2% expected, 1.1% prior rev up 0.1pp), while Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but with some of the gloss taken off by a downward revision to -0.9% (initial -0.6%).
  • USDJPY bears remain in the driver’s seat after once again traded to a fresh cycle low on Monday, although we saw a bounce overnight, and a break above initial resistance of 141.87 (Sep 13 high) we still remain in a downtrend with major resistance seen at 143.63/145.57 20-day EMA / High Sep 4, while support is 139.58 (Sep 16 low)
  • Today, we have Trade Balance data due out in about 30 minutes, we expectations of the trade deficit widening, while Core Machine Orders are also due out.
  • Note in the option expiry space, there is a 139.75 strike for an option expiry (this Wednesday, in $1.1bn size). 
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USD/JPY rallied 1.27% to 142.41 on Tuesday, with an impressive bounce from the 139.58 lows on Monday. We trade just below Tuesday's session highs (142.62) at 142.10 as trading gets underway on Wednesday and well below firm resistance is of 143.95, the 20-day EMA.

  • The USD was support by higher US Tsys as yields closed 3-5bps higher after stronger-than-expected US retail sales, they also saw a slight upward revision to prior data (0.1% M/M (vs -0.2% expected, 1.1% prior rev up 0.1pp), while Industrial production was much stronger than expected in August at 0.8% M/M (cons 0.2) but with some of the gloss taken off by a downward revision to -0.9% (initial -0.6%).
  • USDJPY bears remain in the driver’s seat after once again traded to a fresh cycle low on Monday, although we saw a bounce overnight, and a break above initial resistance of 141.87 (Sep 13 high) we still remain in a downtrend with major resistance seen at 143.63/145.57 20-day EMA / High Sep 4, while support is 139.58 (Sep 16 low)
  • Today, we have Trade Balance data due out in about 30 minutes, we expectations of the trade deficit widening, while Core Machine Orders are also due out.
  • Note in the option expiry space, there is a 139.75 strike for an option expiry (this Wednesday, in $1.1bn size).