- USD/JPY hits 111 handle, the highest level since Jan. 23, bias bullish. US dollar bull trend remains intact while the yields keep pushing higher.
- Improved risk-on seen after China said it is willing to work with U.S. on trade issues and has offered a $200bn/year trade deficit reduction package to the US boosting the USD.
- On the data front, initial jobless claims increased marginally by 11k to 222k in the week ending 12 May, while the four-week average declined 3k to 213k.
- The Philly Fed general business conditions index jumped 11.2pp to 34.4 in May, well-above the six-month average of 26 and above expectations.
- Further Japanese data released earlier in the day disappointed, as Machinery Orders fell 3.9% m/m, more-than-expected in March and by 2.4% y/y.
- Japan's National CPI for April also missed expectation. April CPI, core nationwide y/y decreased to 0.7 % (forecast 0.8 %) vs previous 0.9 %.
- Technical indicators are biased higher. The pair has broken major trendline resistance at 110.50.
- Price currently hovers around 61.8% Fib at 110.87, scope for further upside. Weakness only on retrace below trendline at 110.40.
Support levels - 110.41 (5-DMA and trendline), 110, 109.68 (50% Fib)
Resistance levels - 111, 111.48 (Jan 18 high), 112
Recommendation: Good to go short on dips around 110.75/85, SL: 110.35, TP: 111/ 111.50/ 112.
FxWirePro Currency Strength Index: FxWirePro's Hourly USD Spot Index was at 160.332 (Bullish), while Hourly JPY Spot Index was at -157.182 (Bearish) at 0745 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
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