USD/JPY testing below key 112.80 support

Currently, USD/JPY is trading at 113.36, up 0.25% on the day, having posted a daily high at 113.48 and low at 113.02.

USD/JPY is consolidated having tested recent lows of the 15th Feb downtrend on a broadly weaker dollar as Asian equity markets soften and European markets trade mixed. "US futures are positive, however and Treas Sec. Mnuchin’s comments on “significant” tax reforms should be supportive of risk appetite," explained analysts at Scotiabank earlier. 

Meanwhile, analysts at Bank of Tokyo Mitsubishi noted that the FOMC minutes have been classed by the market as more on the dovish side. "While we would question how long that conclusion will last, there is certainly scope for it to last over the relatively short period of a week when there are no major data releases or events to alter sentiment. Fed President Kaplan (voter), Bullard (non-voter), Williams (nonvoter) and Mester (non-voter) all speak over the period through to next Thursday but the key US data will probably be the PCE inflation data released on 1st March."

Absolute level of US debt is a concern - US Sec. S.Mnuchin

USD/JPY levels

USD/JPY short-term technicals are bearish. Only below 111.59 would introduce scope to the base of the cloud, which lies at 109.92 and of which seen, analysts at Comerzbank suggest that they look for this to hold (this is also the 50% retracement of the move up from November). "However this is not our favoured view - we also note that the recent move lower continues to indicate that this is the end of the corrective move.Spot is easing under the base of hourly cloud support."