The yen weakened in the market amid a rally in equity prices and rising US bond yields. Markets finished with gains and near the close, the Dow Jones was up by more than 1%. The 10-year yield rose from 2.20% to 2.25%. Regarding economic data, in Japan the trade balance data showed a larger-than-expected surplus (JPY614.7bl), merchandise exports gained 12% y/y, while imports rose 15.8%. A report from the Ministry of Finance showed that Japanese investors continue to repatriate funds. In the US, initial jobless claims rose 10K to 244K, holding close to multi-year lows while the Philly Fed survey fell more than forecast in April to 22.0 from 32.8. Tomorrow, the report to watch in the US will be the flash PMI.
The USD/JPY pair moved to the upside all day at a modest pace. It had difficulties breaking above 109.10/15. It stopped before 109.50 and pulled back modestly. The tone continues to favor the upside unless price drops back under 108.80/90, that event could attract sellers. If nothing out of the normal happens, price action should be limited during the next hours, keeping the pair within or near the 109.40/109.10 zone. One important technical fact, was that it as able to post a daily close on top of 109.00 gaining a new support before the 108.30 zone. On a wider perspective, as long as it remains under 110.10, risks will be tilted to the downside.
Support levels: 108.70 108.35 108.10
Resistance levels: 109.60 110.10 110.40