USD/JPY: time for some consolidation while bulls look to Oct's 2018 high at 114.55
- USD/JPY moving sideways after a rollercoaster ride in price action overnight.
- USD/JPY offered good two-way business on plenty of headlines rolling in, from Brexit to trade wars.
USD/JPY is consolidating in the Tokyo open and currently trades at 113.57, that is up from an overnight low of 113.10. The pair rallied in North America as US stocks corrected the initial risk-off drop on news that China has made an opening bid to appease Washington with respect to their ongoing trade dispute ahead of the G20 summit on the 26th November - raising risk sentiment and prospects for Oct's 2018 high at 114.55 if a trade does get done.
As far as data went, analysts at Westpac noted that the "US retail sales rose a decent 0.8% in October though rebuilding efforts in the wake of Hurricane Florence via big jumps in auto and building materials sales likely inflated gains. Net of that and revisions, the report overall tracked on the weaker side: the “control group”, a subset of sales that excludes food services, gasoline, auto and building materials and feeds directly in GDP rose a modest 0.3% (0.4% expected) and Sep was revised to 0.3% from 0.5%."
Brexit took the market's attention
However, markets were mostly [aying their attention to the Brexit headlines with plenty of angst still weighing on investor's risk appetite and prospects of slower global growth filtering its way back to damage the US economy was also a weight and supportive of the yen. USD/JPY was ending NY at 113.66. With respect to US yields, the US 10yr treasury yields dropped from 3.13% to 3.08% - a two-week low – but then recovered in late trade, while 2yr yields fell from 2.88% to 2.83%. The Fed fund futures yields continued to price the chance of another rate hike in December at 70%.
USD/JPY levels
- Support levels: 113.00 112.60 112.25
- Resistance levels: 113.70 114.00 114.45
Valeria Bednarik, Chief Analyst at FXStreet explained that the 4 hours chart shows that the pair tested a mild bullish 100 SMA before bouncing, now trading at daily highs:
"Technical indicators also recovered after nearing oversold readings, holding below their midlines but with an increased upward strength, indicating that the pair could continue recovering ground. The key will be stocks´ behavior as a mirror of the market's sentiment. Should equities continue recovering, the pair could regain the 114.00 level, although a turn to the worst in sentiment will likely see it back challenging the 113.00/10 support zone."