USD/JPY treading water below 113.00 ahead of US ISM

The greenback remains on a positive note at the beginning of the week vs. its Japanese counterpart, with USD/JPY now hovering over the 112.80 area.

USD/JPY gains capped beyond 113.00

After briefly testing daily highs beyond 113.00 the figure during early trade, the pair slipped back to the 112.80 area soon afterwards in tandem with the correction from daily tops in yields of the US-10 year benchmark.

The solid momentum in the buck has been also reinforced by rising optimism over the tax reform plans proposed by the Trump’s administration last week. It is worth mentioning that the White House expects the tax reform to definitely see the light at some point by year-end.

Furthermore, according to the latest CFTC report, JPY speculative net shorts increased to fresh 3-week tops during the week ended on September 26, in light of the latest CFTC report.

Data wise today, September’s ISM manufacturing, Markit’s manufacturing PMI and the speech by Dallas Fed R.Kaplan (voter, hawkish) are all expected in the US later in the session.

USD/JPY levels to consider

As of writing the pair is gaining 0.28% at 112.41 and a breakout of 113.06 (high Oct.2) would open the door to 113.27 (high Sep.27) and finally 113.60 (high Jul.14). On the flip side, the immediate down barrier lines up at 112.27 (10-day sma) seconded by 112.02 (200-day sma) and then 111.71 (61.8% Fibo of 114.51-107.33).