USD/JPY: consolidated in Tokyo although with a bearish bias

• USD/JPY bears taking control in Tokyo.
• JPY’s risk profile is critical in this environment of broad-based risk aversion.

USD/JPY is offered in the Tokyo open after the pair was recovering in the NY session from just below the 109 handle on a recovery/correction in stocks and yields that were capped.  Currently, USD/JPY is trading at 109.40, down -0.14% on the day, having posted a daily high at 109.73 and low at 109.36.

USD/JPY fundamentals

USD/JPY was a complicated mix of fundamentals on Tuesday while volatility was playing its roll amongst the stock market rout. There was some support coming into markets on the back of the N225 & S&Ps finding support at their 200-DMAs. However, bulls were capped on the 109 handle at 109.65 offers and falling well shy of anything convincing bid-wise before the 21-DMA at 110.18. USD/JPY was capped by the 4-hr 21SMA at 109.63 and recovered from 108.45 in yesterday's trade. The 10-year yield note dropped as low as 2.64% after hitting a 4-year high of 2.88% on Monday.  

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the price is below a bearish 100 SMA, currently acting as a dynamic resistance around 109.85: "The Momentum indicator maintains a sharp bearish slope at fresh 1-week low and the RSI losing its upward strength around 47, all of which maintains the risk towards the downside."