USD/JPY: bearish bias and eyes on the base of cloud at 109.92

Currently, USD/JPY is trading at 111.91, down -0.12% on the day, having posted a daily high at 112.07 and low at 111.74.

Wall Street: uncertainty hits financials and yields, stocks with modest moves

USD/JPY has dropped below the 112 handle while the yen gathers bids in an environment that means further support for the Yen is inevitable. Risk-off play favours the yen while the markets try and second guess Trump's next move and whether the administration and Congress can work efficiently together or not. 

The dollar was pretty much flat on the day but the 100 level in the DXY is very fragile and lower yields are not doing the dollar bulls any favours at the moment. Ovenright interest rates had the US 10yr treasury yields extending a two-week-old decline from 2.40% to 2.27%, the 2yr down from 1.17% to 1.14% and the Fed fund futures dropped 1-2bp. The VIX, however, was relatively flat with a bullish bias on the charts and supportive of some consolidation while below the 112 handle in USD/JPY - daily closes here could be a significant bearish outcome for the major. 

USD/JPY levels

Between 111.50 and 112.50, the price is within a tight range, but a break out to the topside would be targeting the next key resistance at  113.48 (imoku 1) ahead of 114.89 (imoku 2) and analysts at Commerzbank said that this will need to be regained in order to alleviate downside pressure and reintroduce scope to key short-term resistance offered by the 16 month resistance line at 118.15. A break to the downside through 110.70 would open up scope to the base of the cloud, which lies at 109.92."