USD/JPY: will the dollar continue on the bid and target the 113 handle vs the Yen?
USD/JPY is currently trading at 122.66 with a high of 122.70 and a low of 122.49.
After sitting between a range of 112.20 and 112.75 on Friday, USD/JPY remains in the same consolidation in the quiet the start of this week in Tokyo.
Japanese data released on Monday:
- Japan Tankan Large Manufacturing Outlook came in at 19, above forecasts (16) in 3Q
- Japan Tankan Non - Manufacturing Outlook below expectations (20) in 3Q: Actual (19)
A quick recap from Friday's US closing session for the month of September, US 10yr yields initially dipped from 2.32% to 2.29%, following the disappointing PCE deflator data, but then rose to 2.34% after stronger data (Chicago PMI) and reports that Trump had met with Fed Chair candidate Warsh (who some consider slightly more hawkish than incumbent Yellen), as noted by analysts at Westpac.
The week ahead: expect transitory weakness in September’s nonfarm payroll growth - Nomura
The analysts also explained that the Fed fund futures yields continued to price the chance of a December rate hike at 76%. This is giving the dollar a boost that is technically breaking out of a range to the upside. Eyes will be on the euro as to whether the dollar can run much higher should the single currency breakout further to the downside, marking a strong top recently on the charts. Political fundamentals in Spain could be a trigger: 90% Of Catalans voted "Yes" To leave Spain – RTRS
As far as the yen goes, it can suffer further if the N.Koren news stays quiet and investors continue taking on risk.
USD/JPY levels
Valeria Bednarik, chief analyst at FXStreet explained that, technically, the daily chart for the pair shows that it holds on to gains beyond its 100 and 200 DMAs, while technical indicators corrected overbought conditions, to turn flat well above their mid-lines, indicating that, despite the absence of upward momentum, bulls maintain the lead. "Shorter term," she added, and according to the 4 hours chart, "the lack of directional strength all through the week left technical indicators within neutral territory, but the risk remains towards the upside, as the price held well above a bullish 100 SMA, now around 111.10."