USD/JPY: yen making advances but against the grain

USD/JPY is mixed on the open following a subdued performance on Wall Street in a relatively risk-off environment while the dollar continues to attract a bid.

"In the US, major indices feared slightly better, but there was weakness across most sectors. Sluggish earning results and valuations at elevated levels appear to be providing the cautious tone. Treasury yields flattened 0.5-3.5bps across the curve," explained analysts at Westpac.

The Yen remains on the back-foot overall, despite picking up at the start of the weak, but on the back of investors pricing Abenomics 2.0 and subsequent further easing of policy by the BoJ leading, the Yen remains better offered generally. Such sentiment though and anticipation of new fiscal and monetary support should support the sentiment for Japanese equities to improve.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the Momentum indicator keeps posting lower highs and has heads now lower right above its 100 level, while the RSI indicator is retreating from overbought levels, in line with the shorter term outlook. "Still, the pair is not yet seen below the 104.70 level, generally expected to extend its consolidative stage until the BOJ's monetary policy meeting by the end of this month."