USD/JPY: eyes now on 109.50 on a spike from below 108.80

Currently, USD/JPY is trading at 109.32, up 0.47% on the day, having posted a daily high at 109.38 and low at 108.45.

USD/JPY is up through the 109 handle on a broad based rally in the greenback after the recent announcements of the disaster bill for Harve that will include a debt limit increase while Democratic leadership has agreed to support it. US ten-years are now up +1.60% now trading at 2.0925%.

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The JPY was already weakening into the NA open following a short-lived knee-jerk rally to a fresh one week high due to an inaccurate social media post relating to North Korea, underscoring JPY’s ongoing vulnerability to haven-driven gains in an environment of elevated geopolitical uncertainty, as noted by analysts at Scotiabank. 

"The 10Y U.S.-Japan spread appears to have stabilized, however, risk reversals suggest a continued build in the premium for protection against JPY strength," explained the analysts at Scotiabank further.

USD/JPY levels

While the 108.50 area has provided clear support with the near-term balance of risk appears to be shifting, USD/JPY will only be negative on a drop below the April low at 108.13 while the focus on the bid lies with 111.05 current August high and the 55 day ma, according to analysts at Commerzbank. "Above here would target the 112.44, the 200 day ma. There is scope for the top of the range at 114.38/49.  Below 108.13 would target the 107.49 July 2016 high, then 106.50, the 61.8% retracement of the move 2016-2017," argued the analysts at Commerzbank.