USD/JPY: eyes for 111 handle albeit recovery capped by 110.80 resistance

Currently, USD/JPY is trading at 110.72, up 0.05% on the day, having posted a daily high at 110.84 and low at 110.56.

Wall Street drops amid raising concerns over Trump's agenda

USD/JPY is soft in the Tokyo open and the dollar's come back rally overnight has stalled. The greenback was recovering from the sell-off post healthcare bill failings and markets were clutching at straws when some of the GOP were suggesting a more accommodative attitude towards the looming tax reforms. USD/JPY made a double bottom at 110.10 and subsequently moved up to 1110.60, paused and climbed higher to meet the 110.80 resistance. 

Trump wants to package tax reform and infrastructure deal

"The 10-year note yield fell to 2.36% before recovering modestly to end the day in the red anyway at 2.38%," explained Valeria Bednarik, chief analyst at FXStreet, adding, "the yield of the two-year note traded as low as 1.236%, before also recovering modestly. Nevertheless, the pair is intrinsically bearish, now trading below the previous yearly low of 110.62, the immediate resistance."

USD/JPY levels

USD/JPY bounced from the 200-week ma lies at 110.11 earlier, but a sell-off back down to challenge this area opens up the potential for a run towards the 55-week ma at 108.55.  "Rallies will find initial resistance at 113.50/63 but only above 115.62, would we look for a challenge to the key short-term resistance offered by the 16 month resistance line at 117.55," argued analysts at Commezbank.