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USD/JPY Holds Back Below Y110.00 as Rate Tracks UST Yields.

JPY
MNI (London)
  • Tuesday's USD/JPY recovery in pre NY trade saw rate touch a high of Y110.55 before reversing in the US session.
  • The turn lower was seen driven by the fresh easing in UST yields, sales taking the rate back below Y110.00 (and Apr05 low of Y109.96) to a low of Y109.67.
  • Rate recovered to Y109.93 ahead of the London fix before closing the day at Y109.74.
  • Early demand in Asia, as rate continued to take direction from UST yields, saw it edge to Y109.90 but ran into supply at the Tokyo fix. Rate dropped to Y109.58 in reported stop driven trade, but managed to recover to Y109.83.
  • Rate then settled between Y109.72/82 through to the Europe open.
  • Support remains at Y109.58 ahead of Y109.38/36(61.8% Y108.41-110.97/Mar15 high).
  • Resistance remains at and above Y109.90, traders aware that the area between Y109.95-110.00 holds strikes of $2.9bln expiring options for today's NY cut, nearly all the interest is for USD puts. A break of Y110.00 to open a move back toward Y110.20/35 ahead of Y110.55.
  • US Trade at 1230GMT. Fed Evans 1300GMT, Fed Kaplan 1500GMT, Fed Barkin1600GMT. FOMC Minutes to be released at 1800GMT.
  • UST yields provide the main focus for USD/JPY direction.
  • MNI Techs: USDJPY has pulled back from recent highs as the pair corrects lower and begins to unwind its overbought condition. Attention turns to the next support area of 109.31, the 20-day EMA. A break of this average would expose 109.00 and potentially below. From a trend perspective, the outlook remains bullish. The trigger for a resumption of the trend is 110.97, Mar 31 high. A break would open 111.30 next, Mar 26, 2020 high.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
BulletMarketsForeign Exchange Bullets

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