USD/JPY: bulls taking charge, challenging bears commitment at 109 handle

Currently, USD/JPY is trading at 108.90, up 0.04% on the day, having posted a daily high at 108.99 and low at 108.80.

USD/JPY has been in a chop in the open of Tokyo within a tight range as markets consolidate the recent volatility and await the first round of the French elections this weekend. However, as Tokyo kicked into gear, the bulls took charge and are challenging the 109 handle currently. 

The drivers overnight stayed with Wall Street given the start of earnings season again and a mixed bag there left investors on the sidelines and parking cash ideally in the yen. However, Gold was on the backfoot was and US yields were recovering, although the focus was on stocks and the Dow lead to a rally in the Yen.  

USD/JPY lost the 109 handle and made a low as low as 108.63. The markets will remain focused on the corporate earnings while the calendar is void of critical events until the weekend's French elections and round one, which in fact could be more important than round two from a hedging and risk perspective as analysts at Nomura explained:

• French elections: round one more expensive to hedge than round two? - Nomura

USD/JPY levels

• Has USD/JPY Bottomed?  - Kathy Lien  Kathy Lien at BK Asset Management

USD/JPY derived support having stayed above the 55-week ma at 108.36 and is now attempting the 109 handle in Tokyo. This, however, remains in no man's land until 
a key resistance at 112.20 (55-day ma, as noted by analysts at Commerzbank earlier. " Only above 115.62 would we look for a challenge to the key short-term resistance offered by the 16-month resistance line at 117.21."

• USD/JPY analysis: In ranges with downside risks - Matias Salord, FXStreet 

Meanwhile, Matias Salord explained that the recovery of the US dollar needs a confirmation on top of 109.30 in order to gain support for a bullish extension to 109.70. "The dominant trend continues to favor the yen and only a break above 110.10 could change the bias."