USD/JPY: A slow start in Tokyo, but plenty of action to come

• USD/JPY has started out the Tokyo session pretty much where it left off yesterday, considering the US has been out on President's day and there has been little subsequent action since the Europeans packed up for the day. 

USD/JPY is currently trading at 110.58, just off from the early Asian high of 110.64 with bulls dragging their heels in the tentative correction of the end of last week's Valentines day sell-off where the bulls started to fall out of love with the dollar across the board. 

Meanwhile, optimism over trade talks between the US and China have kept spirits high, although there is still plenty to play for in Washington this week and what goes up, must come down when there are profits on the table to be had; Without there being anything concrete on the matter to beef up the headlines, sentiment will likely wear thin again unless a buy the rumour sell the fact trade is going to play. 

Eyes on global equities

Eyes should pay close attention to Asian stocks today in comparison to yesterday's positive performance with the Shanghai composite rallying around 2.68 percent to close at about 2,754.36 while the Shenzhen component added 3.954 percent to close at approximately 8,446.92. Hong Kong's Hang Seng index added 1.5 percent while Japan's Nikkei 225 ended 1.82 percent to close at 21,281.85 after a jitter open where traders were not quite sure what to make of the weekend China press that warned of cautious optimism over the trade talks. 

Meanwhile, the yen can also take its cues from the US 10yr treasury yield implied by futures markets that ranged between 2.66% and 2.67% overnight. 

USD/JPY levels

Valeria Bednarik, Chief Analyst at FXStreet explained that the short-term picture is now neutral according to the 4 hours chart:

"The pair continues developing well above its 100 and 200 SMA, while the RSI indicator turned flat around 53 and the Momentum turned north, now aiming to enter positive ground. The risk of a downward move should increase on a break below 110.10, the immediate support, while bulls will be more confident on gains above 111.00."