USD/JPY: 107 on the radar in improved risk setting

• USD/JPY: remains in the hands of the bulls, China out.
• USD/JPY: turnaround Wednesday on improved risk sentiment. 

USD/JPY has been off to a quiet start in the Tokyo open having run out of gas on the back of the turn around in stocks on Wall Sreet overnight.  USD/JPY traded up from a dip below the 106 handle in European trade to a high of 106.84 by the close of play in NY. Currently, USD/JPY is trading at 106.79, up 0.01% on the day, having posted a daily high at 106.86 and low at 106.72.

Trade wars back with a 'cooler' bias, antipodeans better-off - Westpac

Intermarkets for USD/JPY

Wall Street made a comeback and was recovering from US-China tariffs news where the pair fell just shy of the 107 handle and recent 28th March highs of 107.01. The US benchmarks made an impressive reversal with the DJIA, after trading over 600 points lower, reversing to close the day up 230 points at 24,264.30 while the Nasdaq Composite and the S&P put up over 1.0% each, to close at 7,042.11 and 2,644.69 respectively. 

As far as yields went, 10yrs recovered from 2.75% to 2.80% tracking US stocks while the 2yr yields rose from 2.25% to 2.29%. The Fed fund futures yields continued to price in two more hikes by the end-2018. And for today, while China is out on holiday, markets can breathe a little and hope some common ground between the two nations, China/US, can be found, (such sentiment risk-positive, yen negative). 

USD/JPY levels

From a technical point of view, Valeria Bednarik, chief analyst at FXStreet explained that the bounce from the 106.00 has somehow dented the risk of a steeper decline, although there's a long way ahead before the pair actually turns bullish.

"In the 4 hours chart, moving averages remain directionless, with the pair settling above it, while technical indicators turned flat above their mid-lines, losing upward strength below their previous daily highs."