The dollar lifted versus the yen, and was near net unchanged versus the euro and sterling, among other currencies, heading into the New York interbank open. USDJPY has settled in the mid 108s after making a rebound high yesterday at 109.22. A five-month low was logged at 108.12 on Monday. Tensions remain high on the Korean peninsula, a backdrop that should keep USDJPY, which correlates inversely during phases of heightening North Korean concerns, a sell on rallies.
The combination of geopolitical angst and uncertainty over the Trump administration’s ability to push its agenda through, could keep the greenback pressured for the foreseeable future. Today’s U.S. calendar is thin, highlighted by the Fed’s Beige Book for the May 2, 3 FOMC meeting. It’s not likely to provide any surprises. The outlook should remain for moderate growth, but we’ll scrutinize the report for any signs of deeper than expected erosion. The only data on tap are weekly mortgage figures from the MBA, along with EIA inventories. There will be Fedspeak from non-voter Rosengren.
Hence USDJPY with lack of major data today and with geopolitical tensions to affect it the most, the pair seems bullish since it broke above last up fractal and it is traded above 50-period EMA today. The pair is likely to hit last week’s high areas 109.20-109.35, which is also the confluence of 200-period EMA in the hourly chart. The RSI is at 61, sloping to oversold territory. In the 4-hour chart, the last four candlesticks are bullish, while pair broke the 20-period EMA earlier. Nevertheless, in Daily chart, the pair continues its downtrend therefore in longer timeframes, weakness is likely to continue.
Long position was taken is the hourly chart, at 108.90, with Target 1 at 109.20 and Target 2 at 109.35 for today. The support level comes in at 108.60-50 area.
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