USD/JPY edges higher above 112 after mixed N. Korea headlines
The USD/JPY pair recorded a 30-pip rise in the last hour on increasing risk appetite and refreshed its session high above 112 before losing its momentum. After easing down to 111.90, the pair gathered traction again and was last seen trading at 112.10, up 0.26% on the day.
Interfax, a Russian news agency, claimed that American and North Korean diplomats could have a meeting later this week in Moscow and ramped up the risk appetite, hurting the demand for the traditional safe-haven JPY and boosting the pair. However, the risk sentiment quickly reversed after a separate report by CNN quotes a North Korean official saying, "North Korea is not ruling out diplomacy, but before we can engage in diplomacy with the Trump administration, we want to send a clear message that the DPRK has a reliable defensive and offensive capability to counter any aggression from the United States."
- North Korea rejects diplomacy with US for now - CNN
Nevertheless, the fact that major equity indexes in the U.S. are holding on to their modest daily gains on Monday with the Dow Jones Industrial Average and the S&P 500 adding 0.25% and 0.05% respectively, is keeping the bullish momentum relatively strong.
On Tuesday, the economic docket from Japan won't be featuring any data from Japan. Later in the day, import/export price index and industrial production figures will be released from the United States.
Technical outlook
Despite that recent fluctuation, the pair preserves its near-term neutral outlook. On the downside, the initial support aligns at 112.00 (Oct. 10 low/psychological level) ahead of 111.40 (200-DMA) and 110.90 (50-DMA). On the upside, resistances could be encountered at 112.45 (20-DMA), 113.45 (Oct. 6 high) and 114.50 (Jul. 11 high).
- USD/JPY: broader tone appears set to dominate - Scotiabank