USD/JPY just can’t shake off the 110 tag

USD/JPY just can’t shake off the 110 tag

The pair continues to pivot around the 110.00 level today

After an earlier track to the highs of 110.21 early in the day, the pair fell to a low of 109.77 but is now coming back up again to trade near the 110.00 handle. It’s been a funny ride for USD/JPY this week as trading the pair has mostly been about trading risk and market sentiment.

The rise in US stocks overnight gave reason for the pair to climb but soggy Asian stocks today sees the pair inch a little lower. We are seeing the Nikkei recover a little though as we head into the final hour of trading, with the index now almost flat on the day paring earlier losses.

But for USD/JPY, technical levels are still very much at play. The upside move today failed to breach the 200-day MA (blue line) and it was the same case overnight as well. That remains a key level for sellers to defend right now.

Looking at the hourly chart, upside moves tested but failed to see a firm break above the 200-hour MA (blue line). That means near-term sentiment hasn’t completely turned bullish just yet and remains “caught in the middle” now that price has moved back above the 100-hour MA (red line) as well.

With the market still heavily engrossed by the whole trade rhetoric right now, the trade today for the pair will once again heavily depend on sentiment – although we do have US data due later in the day that could potentially cause a bit of stir. But in the bigger picture, it’s all about market sentiment.

US Treasury yields are flat on the day, likewise for S&P 500 futures, and that isn’t helping with direction at the moment. For now, the 110.00 level can be seen as neutral ground and a skew towards the negative side of risk sentiment will see the pair fall below and vice versa.

A move to the downside will first be met by support @ 109.80 but further support is seen at the 50.0 retracement level @ 109.65.

As for any upside move, it requires a break of the 200-day MA to see a further extension. There’s also large expiries on the day sitting at 109.60 and 110.00 so that will be a range to consider as prices may stay anchored around those levels should the market continue to see a bit of a lull.

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