USD / JPY clears gains after hitting three-week highs, still above 110.00

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  • The dollar fails to run beyond 110.40 and reverses trend.
  • USD / JPY remains bullish, but needs to break the 110.40 / 50 barrier.

The USD / JPY is falling modestly on Wednesday after rising to 110.44, the highest level in three and a half weeks.. The dollar lost momentum as equity markets fell and Treasury yields fell back.

The 10-year rate on the US bond had hit 1.38% on Tuesday, and is around 1.35% on Wednesday. Even so, the dollar index (DXY) rises for the third day in a row, which appears to be limiting the pair’s retracement.

The USD / JPY advance found resistance at the 110.45 zone, where last week’s highs are as well. The pair needs to break that zone to enable more raises. Below 110.00, the yen would be strengthened.

Data and declarations

I know knew the final reading of GDP growth in Japan for the second quarter which showed an upward revision from 0.3% to 0.5%, surpassing the expected 0.4%, with a revision in the consumption data. BBH analysts said that “that means that like Australia, Japan had a stronger than expected moment before the restrictions. So far in the third quarter, the economy has held up better than expected, but the state of emergency could be stretched to the fourth quarter if the virus data does not improve. We anticipate another fiscal package once the leadership vote in the LDP is completed on September 30. “

The governor of the Bank of Japan said on Wednesday that he expects expansionary monetary policy to continue even in a context of greater fiscal stimulus.

In the US the focus of attention will be on Wednesday rsport of job offers and in the Beige Book of the Federal Reserve. The speakers will be John William from the New York Fed and Robert Kaplan from the Dallas Fed.

For him USD / JPY what happens with the bond market and yields is expected to be decisive. As well as what happens to stocks on Wall Street. If there is a combination of a fall in yields and in the stock markets, or rise in both, the impact on the price should be more pronounced.

Technical levels

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