USD/JPY intermarket: closes below 111.40 would be key, watching US stocks

Currently, USD/JPY is trading at 109.84, down -0.45% on the day, having posted a daily high at 110.44 and low at 109.63.

USD/JPY is testing a key downside level with broad dollar weakness and yen strength across the board. 110.40 was too tough a pivot area to break through and selling interest has resumed on political and economic uncertainties with investors sitting on the sidelines digesting the outlooks.

US stocks are down approaching the lowest level for June with the S&P testing 2420. Gold, on the other hand, is consolidated, stabilising after a series of bearish sessions. Yields are hitting a brick wall in the 10 years and unable to get above water through 2.22% weighing on the DXY and USD/JPY. DXY is trading between 97.04/32 and down -0.06% at 97.21 currently. 

FOMC preview: Fed should wait before next rate hike – Danske Bank

All eyes turn to the BoJ and FOMC this week. “the third hike since the US election last November is so greatly assumed that it is not the most important element of the FOMC meeting.  However, if it is not delivered, that would indeed overshadow everything else.  The simple, even if unpleasant, truth is that the economy’s rebound from the typical Q1 weakness is disappointing, and more, to the point, the preferred core PCE deflator has drifted lower for three consecutive months,” explained analysts at Brown Brothers Harriman. 

USD/JPY levels 

109.11 is a recent low, and analysts at Commerzbank argued that below here, there is scope for slippage to the 108.13 April low, “however we have the 55-week ma at 108.74 and the slow stochastics have turned higher, which suggests that the downside is limited.” To the upside, 110.40 is pivotal for 110.80 and 111.71 targets being the 1st June high.

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