USD/JPY trading has been choppy over the past few sessions
The pair started off weaker yesterday near 107.00 before rising on hopes for global central bank stimulus, then turning lower in European trading and then rising back as US stocks surged in overnight trading.
But with the G7 communique possibly disappointing, the yen is finding reason to keep firmer to start the session today with USD/JPY just back under 108.00 for now.
Despite the big surge in US stocks yesterday, Treasuries remain less enthused with 10-year yields even sitting lower by 4 bps to 1.124% currently.
This still points to some indecision in the market about central bank stimulus and if it can really help to bolster the stock market economic confidence in the big picture.
The fear for investors is that it won't be because of how this is no environment for monetary policy to actually be that effective, should the virus outbreak become worse.
But with the amount of volatility in the market today, one cannot rule out a brief relief, especially after sharp moves seen in the past week or so.
For USD/JPY, the topside remains capped by the 200-day MA (blue line) @ 108.40 and that remains a key line in the sand for any further upside break.
Meanwhile, there is some minor downside support around 107.50-65 with further support seen around 107.00 next.
The figure level will be a key one to watch as it could lead to a more serious breakdown, especially if the market feels disappointed by central banks in the coming days/weeks.
In any case, watch out for the US session once again later today. Risk may be more tepid now but as we have seen yesterday, Wall Street can always turn things around.
