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USD/JPY: bulls need to get above the 200-D SMA with daily closes

6/27/2018, 10:59:35 AMBasics of Trading
USD/JPY: bulls need to get above the 200-D SMA with daily closes

USD/JPY has been well placed on the 110 handle with a slightly better tone in risk-sentiment on Tuesday while the Trump Administration signals that it would back down on new investment restrictions against China. USD/JPY was, however, capped at the familiar 110.20 200-D SMA resistance overnight, currently trading at 110.07 at the time of writing with a high of 1110.21 in Tokyo as well. 

Overnight, stocks were a main theme in the pair, while the yield spread played less of a role if only to weigh on the bull's advances. USD/JPY bounced from 55-D SMA down in the 109.30's to the 200-DMA. 

Wall Street buoyed by energy, ends day with modest gains

The greenback rose against a wide range of currencies and the DXY recovered last two days’ losses, trading for the best part of the NY session the higher range of between 94.1710-94.7720. The US 10yr treasury yield, however, saw a slight change and ranged sideways between 2.86% and 2.90%, while 2yr yields ranged between 2.52% and 2.55%. Fed fund futures yields continued to price 1.5 more hikes for 2018. 

The day ahead:

"May data on durable goods orders, pending home sales and wholesale inventories. DGOs are seen -1% m/m but +0.5% ex-transportation goods i.e. Boeing orders must have been softer. The pending home sales report is usually overlooked but any surprise in the inventories data would see economists tweak their Q2 GDP estimates. The median forecast on Bloomberg is 2.9% annualized but there has been a lot of talk of a much stronger headline reading.

Fedspeak continues with Governor Quarles on bank regulation and Boston Fed president Rosengren on ethics and economics," analysts at Westpac noted

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the pair trimmed its Monday's losses and is currently trading a handful of pips above its 100 and 200 SMA which continue lacking directional strength:

"Technical indicators have advanced enough to enter positive territory, favoring additional advances, particularly if the pair continues advancing beyond the current 110.10/20 region."