USD/JPY turn-around: volatility on Abenomics 2.0 is the theme ahead of key data

USD/JPY rallied and reversed on wrong-footed markets on the Nikkei news mix-up, given that the headlines offered idea as coming from Japanese officials when in fact they were from commentators.

USD/JPY was very fragile overnight and dropped from 107.25, recording a low in the European session of 105.41. This drop came as a strong bid in the yen when there were rumours overnight that Kuroda spoke out against implementing "helicopter money," sending the pair into a volatile situation of a 200 pip round turn before today's volatility. For the day ahead, Nikkei Manufacturing PMI (Jul) and US Markit Manufacturing PMI (Jul) are due.

USD/JPY levels

105.30/104.30 on the downside are a key support zone, with 103.55 support (16th June low) as key downside target, while a break above 107.32 opens 108.78 at the 78.6% retracement, guarding  111.45 May high. 103.55 support (16th June low)."