- USD/JPY trading up on bond yields, Trump comments.
- Yen softening following BoJ threat embedded in rhetoric.
USD/JPY has climbed ahead of London markets, testing just beneath 106.80, with the US Dollar peaking at 106.86 in Tokyo trading.
The Dollar is flexing its muscles today, as spikes in bond yields push equities back down and Trump Twitter comments are giving the Greenback a bit of a boost, with Trump highlighting the recent positive figures within the US economy.
The Bank of Japan has been delivering a repetititious series of rhetoric lately in the face of an ever-strengthening Yen that the central bank has no plans to increase rates in the near future, hoping markets would take the hint and settle down their Yen buying. BoJ patience finally wore thin enough last Friday that the institution fired off a warning shot across the market’s bow, delivering a thinly-veiled threat of market intervention should the Yen continue to strengthen, with the justification that a strong Yen will hamper economic growth within Japan. After decades of deflationary pressure, Japan is finally experiencing inflation, though much lower than the 2% target they are hoping to achieve. The BoJ remains dedicated to whatever easy monetary policies are necessary to ensure this happens.
The pair is currently rebounding from a 14-month low of 105.55, closing higher for two straight trading days and looking set to do so for a third, if the London session maintains a Dollar-bullish mindset. Daily charts are incredibly oversold, with price far below the 200-day SMA, and Friday’s action dropping a bullish hammer candlestick pattern at the day’s close. Current support is being provided by 105.67, while resistance is stacked up at 107.51 and 108.49.