USD/JPY opens Tokyo on 109 handle, but faltering at key resistance
- USD/JPY pair advances near a key resistance area
- Brexit going in the right direction.
- US stocks close in the green with optimism surrounding the domestic and global economy, pressuring the yen.
USD/JPY has been better bid on the back of renewed optimism surrounding Brexit and global stocks. China announcing stimulus endeavours and with the market backing the notion that the UK will find a resolution to the deadlock in a hung parliament surrounding the Brexit plan has helped risk sentiment rally, supporting the upside in the pair.
As far as the no-confidence vote went, the victory of the vote following yesterday's humiliating defeat where PM May lost the 'meaningful vote' on her Brexit plan by a record margin of 432 to 202. came as expected considering the DUP and hardline Brexiteers had guaranteed their backing. Indeed PM May won with 325 votes. PM May said she would open up Brexit negotiations to a cross-party approach.
Wall Street ends positive and yields higher
Wall Street closed on a positive note on Wednesday, as investors also cheered the optimism in a promising start to earnings season. The Beige Book which also showed eight out 12 Federal Reserve districts reporting modes to moderate growth. Additional support came from US Treasury yields, climbing and flirting with last week's high. the 10-year note hit 2.73%.
USD/JPY levels
- Support levels: 108.65 108.30 107.90
- Resistance levels: 109.20 109.50 109.85
Valeria Bednarik, Chief Analyst at FXStreet explained that the USD/JPY pair advances near a key resistance area, not far below the 61.8% retracement of its latest monthly decline at 109.05:
"The 4 hours chart shows that the 100 SMA stands a handful of pips above this last, while technical indicators grind higher well into positive ground, somehow favoring additional gains without confirming them, as for such to happen, the pair would need to surpass 109.20, now the immediate resistance. Once above it, the longer-term downward pressure will ease, with little in the way toward the 110.00 figure."