USD/JPY eyes back for the 114 handle, supported at 113.80

Currently, USD/JPY is trading at 113.93, down -0.31% on the day, having posted a daily high at 114.38 and low at 113.46.

USD/JPY is recovering from the lows after a drop in US yields and a soft DXY that met supply today from the highs of 99.88. USD/JPY can't hold onto the 114 handle and has run into strong offers on three occasions this week making for a triple top on the daily sticks. However, the price remains above key ma's and within the ascending channel from the 109 lows in mid-April business, supported by the divergence between the BoJ and Fed.

"The current thinking in the market is that the Federal Reserve will hike rates in June (95% chance according to Bloomberg and 83% chance according to the CME)," explained analysts at Brown Brothers Harriman, adding however, "the market is not convinced that a third hike this year will be delivered.  Bloomberg calculates the odds at about 45% chance that the Fed funds target at the end of the year will be 1.25%-1.50%, while the CME puts the probability closer to 40%." Meanwhile, data has been good for the dollar today, slowing down the supply and supporting USD/JPY back above the 113.80 support. 

• Producer Prices Start Q2 on an Accelerating Note
• US: Weekly initial claims was 236,000, a decrease of 2,000 from the previous week

USD/JPY levels

Analysts at Commerzbank noted that USD/JPY has recently eroded the 112.80 resistance line and the top of the cloud at 112.81. "We look for a challenge of the 115.51/62 mid January high. Above here will target the 116.94 2015-2017 downtrend. Intraday Elliott waves counts suggest that we should allow for a retracement to approx. 112.95/112.05 and we note that the slow stochastics are high, suggesting scope for a minor pullback."