The USDJPY pair was bid on Tuesday and rose to three month highs when it broke above the 110 level. It was seen consolidating on Wednesday and was trading slightly weaker during the London session, hovering around 110.20.
Yields on US bonds rose sharply on Tuesday and the 10 year benchmark jumped to 3.10%, which are levels last seen in July 2011. Rising yields are generally positive for the US dollar.
Investors will pay attention to today’s data, including building permits, housing starts, industrial production and capacity utilization. In addition, the FOMC voting member Raphael Bostic is due to speak about the economic outlook at the Augusta Cotton Exchange, which might bring a little volatility as well.
The USDJPY pair is now fighting for the 200 day moving average, which is seen at 110.15. In general, staying above 110 should be positive for the US dollar. The next resistance is seen at 110.50, where yesterday’s bounce stopped.
The supports are at 110.15 and afterward at 110.00 and if not held, the greenback could deteriorate toward 109.50 in the initial reaction. In all cases we strongly recommend to have rigorous money and risk management.
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