Broad selling of the haven dollar to fund risk-on trades is outpacing similar yen losses as U.S.-China trade war nL4N2CU1ISnL4N2CU1IS and pandemic anxiety ebbs slightly, and as USD/JPY's recovery had already priced out the risk of the Fed taking rates negative.
Today's below-forecast U.S. CPI nAQN02IRN1 probably won't change that view, one Fed Chair Powell is expected to reinforce tomorrow, as have Bullard nW1N28N00O and Kaplan nU5N28102N.
Also bolstering risk appetite is the imminent launch of the Fed's well-anticipated corporate bond ETF buying program Click here , seen backstopping financial market risk-taking -- a good deal of which will be funded with now cheap-to-borrow dollars.
These risk-on and USD/JPY bearish factors remain volatile amid pandemic reopening unease and U.S.-China tensions nL1N2CM28N, but USD/JPY's 107.68 high today is at the 50% Fibo of the April-May move on EBS from 109.38 to 105.985.
USD/JPY pierced that Fibo on Monday but didn't close above it, and the daily kijun and cloud top are starting to move lower.
It must close above 107.68 to target the 61.8% Fibo and April 16 swing high at 108.08.
Otherwise, the 10-DMA, tenkan and cloud base at 106.705-87 will attract prices.
Chart IMAGE Click here