USD/JPY: struggles at key resistance area, bullish bias persisting?

• Despite improved risk appetite, USD/JPY bulls denied on recovery to 106.60's.
• US stocks turned around sharply, diminishing trade war angst?

As April gets off to a mixed start, the yen has tightened its grip and has managed a minor recovery from the lows set overnight on a firmer greenback and a turnaround in risk sentiment. Currently, USD/JPY is trading at 106.41, down -0.18% on the day, having posted a daily high at 106.67 and low at 106.41.

A hint of risk appetite returned on Tuesday on a number of counts. The FX space appears less concerned than equities do around current political affairs, sparked up by the Trump administration's attack on China's trade policies of late. Yet, in either case, the dollar is also catching a safe haven bid helping its quest for a material comeback from the 104.60 lows printed late March. US stocks recovered sharply towards the close with the hourly 100 SMA and 4hr 21 SMA both pierced in the S&P. As far as yields went, both European and the US pushed marginally higher. The US 10yr treasury yield climbed from 2.74% to 2.79% while the 2yrs  picked up from 2.26% to 2.29%. Fed fund futures price in two further rate hikes by the end of 2018, (June is a 78% chance).

Forex today: risk sentiment bounces back and dollar stays firm

Key headlines as we move through the Tokyo open as follows:

• USD mixed, (DXY higher).
• USD/CAD dips through H&S neckline support at 1.2800.
• EUR/USD headed below 1.2230 trend line support?.
• USD/JPY up with JPY shorts flushed out (ref: CFTC).
• Gold drops back some gains with firm dollar index above 90.
• Fed's Kashkari: 'pretty close' to neutral rates.
• Fed's Brainard: quite likely rates rise above predicted 'neutral' level in coming years due to U.S. Fiscal stimulus.
• New York Fed launches U.S. Libor contender, slow takeup seen.
• NY Fed names Williams to top post amid the political backlash.
• BOJ's Kuroda says politics won't get in way of exiting easy policy.
• Russia says looking at a joint organisation for cooperation with OPEC.
• China notifies WTO of tariffs in retaliation to US.
• China ready for proportionate response to U.S. tariffs- envoy
• China plans reciprocal tariffs on U.S. Products.
• China's U.S. Embassy: strongly condemn US tariffs, hopes U.S. will refrain from going further down the wrong path" on trade.
• US list of China goods violates international trading rules - Xinhua
• Trump pushing for preliminary NAFTA deal by mid-April.
• W.House: no plans or ongoing talks about action on Amazon, shares up 2 pct, but that could change - a source familiar with white house proceedings.
• U.S. Mar ISM-New York Index, 772.1, 770.2 previous.
• U.S. Mar ISM NY Biz Conditions, 54.0, 54.5 previous.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the 4 hours chart shows that the pair recovered above its 100 and 200 SMAs, both lacking directional strength, adding, "while technical indicators lost upward strength, the Momentum around its 100 level and the RSI at around 60, all of which suggests that buying interest decreased as the price approaches to the 107.00 threshold. Beyond this last, the advance could continue, as the pair could be developing an interim bottom, although it needs to settle above 107.90, the high set late February, to look more upward constructive."