The USD/JPY opened in Asia around 119.35 after breaking above key resistance at 119.20 amid broad USD strength in the wake of better than expected US ISM and a sharp fall in gold and oil prices. The USD/JPY came under a bit of pressure in early Asia when Japanese security houses sold AUD/JPY, NZD/JPY and EUR/JPY and took the USD/JPY down to 119.24.
The JPY weakened against the aforementioned currencies in the afternoon on US names selling the JPY and the USD/JPY drifted up to 119.42 before settling back at the opening level around 119.35 for the balance of the session. Analysts are a bit surprised that the JPY hasn"t performed better than it has in the current environment.
The sell off in the commodity market and some of the emerging market currencies hasn"t led to JPY-funded carry trade unwinding on a large scale and the rise in JGB yields hasn't given the JPY an appreciable boost either. USD/JPY sellers are lined up between 119.50/60 while buyers are lined up ahead of former support around 119.20. A break below 119.20 could see a drift towards waiting buyers in the 118.80/90 window.
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