USD/JPY Fundamental Daily Forecast – Trading Higher Early, but Watch the 10-Year Treasury Yield

The Dollar/Yen is trading higher on Monday, shortly before the U.S. opening. The inside trading range suggests investor indecision and impending volatility. The lack of fresh economic news today is helping to limit volume. Investors may already be looking forward to the Fed minutes later in the week, the expected trade talks between the United States and China, and the central bankers’ symposium at Jackson Hole, Wyoming.

At 1020 GMT, the USD/JPY is trading 110.657, up 0.151 or +0.14%.

The USD/JPY has been under pressure lately due to a drop in U.S. Treasury yields, safe-haven buying in response to the economic turmoil in Turkey and expectations that the Bank of Japan is moving toward relaxing its ultra-loose monetary policy.

The main trend is down according to the daily swing chart. A trade through 110.100 will signal a resumption of the downtrend with 109.673 the next likely target. A move through 111.432 will change the main trend to up.

Today is a light day as far as U.S. and Japanese economic data is concerned. At 1500 GMT, Federal Open Market Committee Member Raphael Bostic is scheduled to speak. Fed speakers have been quiet this month. Although the Federal Reserve remains upbeat on the outlook for U.S. growth, which grew at a 4.1 percent pace in the second quarter, a number of officials including Atlanta Fed President Raphael Bostic have warned that the trade dispute is a downside risk for the economy.

In other news, the Dollar/Yen is trading higher early Monday despite lower U.S. Treasury yields. This could change later in the day if the 10-year U.S. Treasury note futures contract approaches last week’s high at 120’18. This is followed closely by the July 6 top at 120’20. Currently the futures contract is trading 120’12, up 0’04 or +0.10%.

Later in the week, the Economic Symposium will take place at Jackson Hole, Wyoming from Thursday to Saturday. At the symposium, central bankers will focus on changing market structure and the implications for monetary policy going forward. Investors are anticipating a speech from Fed Chair Jerome Powell on Friday.