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Mar 23 - 12:12 PM

USD/JPY - COMMENT-USD/JPY Still Eyeing 112.23 Peak After Fed, Treasury Moves

By Randolph Donney  —  Mar 23 - 10:20 AM

USD/JPY fell back overnight with Treasury yields and stocks on news the U.S. Senate failed to agree a third bill to backstop the economy from coronavirus shutdowns nL1N2BG01Y, but has since dipped and rebounded after the Fed and Treasury's latest financial rescue attempts nL1N2BG0EDnL1N2BG0KB.
The whipsawing left USD/JPY lurking shy of 2019/20 highs at 112.23/40 and supported in the 109.00-62 range.
Prices fell from the 110.88 London session high before the Fed news, to 109.82 and back up to pre-Fed announcement levels, largely mimicking a dip and recovery in Treasury yields.
The immediate risk-on reaction to the Fed news spiked S&Ps back toward unchanged from limit down in futures overnight, but, like prior attempts to lift risk, found worried investors ready to sell the bounce -- and conversely for the dollar.
Tremendous virus-driven uncertainty remains.
Though USD/JPY's 101.18-111.50 March 9 to 20 rebound has likely squeezed out many of the net short IMM positions since last Tuesday, reducing the fuel for further gains, as long as USD/JPY holds above the daily cloud base and 100-DMA by 109, and keeps closing above the 76.4% of 112.23-101.18 cleared last week at 109.62, the focus will be on retesting 112.23.

Chart: Click here

Refinitiv IFR Research/Market Commentary


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