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Jun 17 - 11:55 AM

USD/JPY - COMMENT-USD/JPY May Settle Into A 107.00-83 Range After Data Fireworks

By Randolph Donney  —  Jun 17 - 10:25 AM

USD/JPY appears likely to settle into a modest 107.00-83 range after major U.S. economic surprises and reminders from the Fed that post-pandemic recovery will take time.
The 107.00 level was Monday's low on EBS, which USD/JPY bounced off to reach Tuesday's intra-week high at 107.635.
Bigger resistance comes at 107.83, the 38.2% Fibo of June's 109.85-6.58 retreat.
That is also the current location of the 10-DMA, close to the 21-DMA at 107.85 and the June 10 high, which is the on-close pivot point at 107.87.
A 1.14bln 107.25 option expiry today and fairly flat Treasury-JGB yield spreads dampened trading ranges nL1N2DU0MZ.
And, dismal May Japanese trade data, particularly with the U.S. nL4N2DP11C, didn't bode particularly well for USD/JPY.
However, lingering pandemic nL4N2DT0KX and geopolitical concerns nL4N2DU1AEnL4N2DT4HMnL4N2DU2UJ tend to favor the yen.
USD/JPY is more positively correlated with Treasury-JGB yield spreads than with the S&P 500, so Powell's congressional Q&A and Thursday's weekly jobless claims may have the most influence near-term.
The broader breakout range is between May's low by 106 and 108.215 where the 50% Fibo of June's retreat and the daily tenkan and kijun reside.
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Source:
Refinitiv IFR Research/Market Commentary

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