USD/JPY: slipping to pierce the 200-hr SMA; investor nerves?

• USD/JPY has been tugged and pulled on the back of heightened ME angst.
• USD/JPY: awaits subsequent geopolitical developments as traders sit tight.

USD/JPY has dropped and pulled back in a round turn of 20 pips in the open of Tokyo. Currently, USD/JPY is trading at 106.82, up 0.03% on the day, having posted a daily high at 106.88 and low at 106.70.

Wall Street down as the US gets ready to strike Syria

It was a mixed session for the greenback overnight and, once again, the markets were dominated by geopolitical developments with all eyes on the Middle East. As analysts at Westpac explained, "the equity rally inspired by China president Xi’s speech was punctured by US president Trump’s tweeted missile threats against Syria and Russia – though he did also suggest ending the arms race with Russia."

Fundamental wrap: the drums of war, Russia/Trump/Syria, keep investors on their toes

US data and FOMC minutes:

The CPI dropped 0.1%, mostly in line although the annual core rate rose to 2.1% from 1.8%, its highest pace in a year. However, the FOMC minutes were the key driver in terms of the calendar.  The minutes were leaning more hawkish and the dollar eventually picked up a bid on all members noting a strong economic outlook with “A number” calling for a steeper Fed hike path. The US 10yr treasury yield initially dropped from 2.80% to 2.76% on Syria angst before getting back to 2.78%. 

USD/JPY levels

/analysis/usd-jpy-analysis-directionless-around-10700-201804111840Valeria Bednarik, chief analyst at FXStreet explained the pair held above the weekly low of 106.61 and returned to the 107.00 region after the release of hawkish Fed's Minutes, still lacking directional strength:

"In the 4 hours chart, the pair keeps developing above converging 100 and 200 SMA, both in the 106.20 region, while technical indicators bounced within negative territory, but remain below their mid-lines. The pair would need to extend its advance beyond the 107.50, where it topped last week, to gain some upward traction during the upcoming sessions," Valeria argued.