USD/JPY sits at 110.80 levels but the 111.00 handle still proves to be elusive
The pair continues to find support from around 110.50 and buyers broke back above the 100-hour MA (red line) in earlier trading to establish a more near-term bullish bias. The break comes after yet more disappointing data from Japan as the trade deficit widens alongside a significant dip in exports.
Further weakness in economic data will surely prompt more worries in the yen as it could lead to what Kuroda described yesterday, that the BOJ will take action if conditions start to threaten the central bank's ability to reach its 2% price target.
That said, the bigger factor at play for USD/JPY this week will be risk sentiment derived from trade talks in Washington. Currently, there is a huge deal of silence as markets continue to wait with abated breath on any developments there.
Hence, traders so far are able to react to near-term risk factors and that comes from Kuroda's comments yesterday and the trade balance data today; both of which has proved to be negative for the yen.
However, the upside for USD/JPY still proves to be limited as long as risk assets aren't looking to take flight just yet with trade talks still to come. The 111.00 handle will be the key level to watch out for in that regard but for trading today, there are also large expiries sitting around 110.75-85 that could help to attract price action to stick around current levels.
