USD/JPY above 107 looking for a direction ahead of Fed speeches

16 Apr 2018

  • Regional Fed Presiden Robert Kaplan, Neel Kashari and Raphael Bostic are set to speak in the US session on Monday.
  • The diplomatic tensions between the US and Russia weigh on the general market sentiment.

The USD/JPY is trading at around 107.21 down 0.13% on Monday as the diplomatic tensions between the US and Russia are still weighing on the US dollar. Additionally, the yen is a safe-haven in times of geopolitical uncertainties and the US-Russia diplomatic escalation might lead to a flight to safety and the appreciation of the Japanese Yen.

The US-led airstrike on Syria over the weekend was shrugged off by investors as US stock markets gapped to the upside Many analysts saw the attack as an isolated event. However, the focus now shifts to the diplomatic consequences between the US and Russia. 

Further out in the US session, attention will also be on the three Fed speeches. Dallas Fed President R.Kaplan, a non-voter in the rate-setting FOMC and having a hawkish stance is scheduled to speak at 16:00 GMT. Delivering his speech at the same time of the day will be the rather dovish Minneapolis Fed President N.Kahkari who is also non-voter and finally the Atlanta Fed President R.Bostic, FOMC voter and centrist is slated to speak at 17:15 GMT.

Earlier, the US Retail Sales came in better-than-expected in March (month-on-month) at 0.6% versus -0.1% in January. The retail sales ex-autos came in line with analysts’ expectations at 0.2% m/m in March. The section of the retail sales called control group, included in the GDP, also came in line at 0.4% m/m as forecast by analysts. However, the Empire State Manufacturing Index fell to 15.8 in April from 22.5 the month earlier; analysts were forecasting 18.6 in April. The USD/JPY had a mild negative reaction to the recent news as it lost approximatively 20 pips from 107.41 prior to the data.

No Japanese macro data will be released on Monday, however, Tuesday will see mid-tier data on the Japanese Industrial Production and Capacity Utilization.

USD/JPY 4-hour chart

Supports lie at 107.12 and 106.61 swing lows while bulls should find resistance at 107.79 swing high, quickly followed by the 108 figure and finally 109 psychological level.

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