Leveraged bids around 111.00 help to contain the fall
Equities are roaring and the Nikkei is up by almost 1%. However, USD/JPY is down on the day. Not quite the usual run-of-the-mill, no?
I'm not hearing of anything to have caused the drop apart from large offers being said to have hit after the Tokyo fix. That has caused the yen to be bid on the day still in spite of the surge in equities so far to start the day.
But for USD/JPY, the pair ran into bids around the 111.00 level and that has helped to stall the decline for the time being. Further support is seen at the 100-hour MA (red line) @ 110.81 and the 200-hour MA (blue line) @ 110.74. Bids at 110.50 will also help to provide another additional line of defense for buyers.
As price stays above both key hourly moving averages, the near-term bullish bias remains intact. And staying above the 111.00 level gives a further sign of confidence.
Price is now sticking just above the 111.00 handle as thin liquidity continues to impact the market. And with UK traders away from their desks today, it's going to be a rather quiet one in London trading. But thin liquidity tends to make for exacerbated moves at times so keep your eyes peeled.
Looking at the daily chart, any move higher though would need to see a close above the daily resistance @ 110.40 from the May high. That remains a thorn for buyers as price looks to break higher as it has capped upside momentum on at least two separate occasions this month.
If the type of gains from Asian equities translate to European and US equities, it would provide a tailwind for yen pairs to move higher later in the day. So, that will be an area to watch out for considering the quiet start we have had so far.