USD/JPY: Bulls hold in there with pdice consolidating above 107 the figure

• USD/JPY supported around the 107 handle as markets weigh up recent events.
• Iran, the Federal Reserve, Bank of Japan and Japanese data all in the mix. 

USD/JPY is currently trading at 107.35 between a range of 107.23 and 107.37. The pair is holing up considering the focus on easier money form the central banks that have weighed heavily on US rates and the spread.  USD/JPY extended its decline from 108.10 in the Sydney morning to 107.30 overnight while US interest rates remained on the backfoot, with the 10-year treasury yields probing 1.97% to mark a three-year low.

Overnight, the Bank of Japan maintained its monetary policy unchanged. BOJ Governor Kuroda noted that “significant” downside overseas economic risks were in play, echoing that of all major central banks this week. Just today, the National Consumer Price Index released by the Statistics Bureau for May arrived as follows:

• Headline inflation 0.7% year/year, in line with expectations, from 0.9% year. 

As analysts at Westpac note, "the Bank of Japan held steady yesterday as expected but faces a challenge as the 10-year JGB yield falls to -0.17%." We also had Japanese manufacturing activity deteriorating in June with new orders registering sharpest drop since June 2017 which supported the pair in the open.

Meanwhile, as for US data, the Philadelphia Fed’s manufacturing survey provided more evidence of lost momentum in the US manufacturing sector, falling 16.3 points to 0.3 in June (from 16.6 in May). On the geopolitical front, there were some tensions again rising over US and Iran noise which has ratcheted up after Iran shot down an unmanned US drone. Tension were already running high after recent attacks on oil tankers near the Strait of Hormuz and this now becoming too much to ignore - Long end treasuries rallied further on the concerns as both sides have been arguing as to where it was shot down, with the US saying it was in international waters. The Iranians said that it had entered their airspace.

USD/JPY levels

Valeria Bednarik, the Chief Analyst at FXStreet explained that the USD/JPY pair is bearish according to technical readings in the 4 hours chart:

"It is developing far below all of its moving averages, which extend their declines, as technical indicators retain their strong downward slopes within negative levels. The RSI indicator is currently developing in oversold territory, with no signs of downward exhaustion, suggesting selling interest is still strong. The case for a bearish continuation will remain firmly in place as long as the pair remains below 107.80, the former monthly low and the high achieved in the last American session."