USD/JPY: Another day, another battle at 111.50
Despite the market volatility today, the pair has been rather calm as price continues to keep above 111.00 for the most part but is unable to keep a firm break above 111.50 as price action continues to be trapped amid the lack of enthusiasm by buyers.
The issue with this is that when dollar funding pressures act up (+ USD), the pair has a reason to go higher but when the risk mood gets better i.e. money flows into equities, the softer correlation to the yen (- JPY) is also offset by the lack of a dollar squeeze (- USD).
Hence, the pair is sort of caught in limbo but buyers are at least maintaining a more bullish near-term bias. However, they are not able to firmly capitalise on it as the pair continues its gradual but choppy trading higher over the past few days.
For now, unless the pair firmly breaks above 111.50 and makes a move towards 112.00, there is little conviction to keep with a run higher - especially with the dollar also holding weaker across the board.
Meanwhile, any downside pressure is also unlikely to come by just yet as dollar funding pressures are not entirely over and done with just yet.
As such, the technical and fundamental bias continues to hint at a move higher for now but there is nothing to grease the wheels for the moment so it remains a slow and steady grind.
The risk for any upside move is that if price falls back under the 100-hour moving average at 110.78. That will break the near-term bearish bias if it happens.