USD/JPY Bulls Taking Over in Tokyo; Target Break of 100 1HR SMA

USD/JPY Bulls Taking Over in Tokyo; Target Break of 100 1HR SMA

U.S. retail sales data surprised markets and allowed the US 10yr treasury yield to rise to 1.75%, albeit only to end the session at 1.70% as a one-month low. "Market pricing implies a 70% chance of a Fed rate hike by year-end," according to analysts at Westpac.

USD/JPY rallied to 109.56 on the US retail sales, but here we are back below the 109 handle due to last week's bearish end on Wall Street that supported JPY safe haven demand. Meanwhile, the bulls are testing the bears commitments on a bid session so far in Asia and while the calendar is quiet, the news from over the week brings back concerns about global growth with China's momentum slowing up. "The Nikkei News said Japan's planned consumption tax increase (8% to 10%) set for April 2017 would be delayed, for fear of damaging the economy," noted the analysts at Westpac.

USD/JPY levels

"The market has recently based, we believe, at the 200 month and 200 week moving averages at 105.86/38. This area is key support and we continue to look for it to underpin the market," suggested analysts at Commerzbank. Meanwhile, spot targets room back on the 109 handle on a break of the 100 sma on the hourly at 108.82. However, there is not any key resistance until 110.81/111.90 according to the analysts at Commerzbank who explained, "To see any real upside scope emerge we need recovery through this secondary level - We have some divergence on the intraday charts and would allow for a small dip lower ahead of further upside attempts."