JPY: USD/JPY-Continues To Press MOF Resolve, Strong USD Complicates Intervention

The NZD/USD had a range overnight of 0.5941 - 0.5969, Asia is currently trading around 0.5965. The NZD dip proved to be very shallow and with the risks increasing of a potential resumption of hostilities in the Middle-East the price action has been quite constructive. Technically while the price holds above 0.5900 the bulls remain in control but Trump is apparently considering resuming military action, can the pair push higher in that scenario ? On the day, the USD bears will be looking for this 0.5890-0.5920 area to continue to hold, looking for momentum to test above the 0.6000 area. 

• “Kiwi May Defy Hedge-Fund Bears on Hawkish RBNZ, Analysts Say.” - BBG
• MNI AU - The focus in NZ this week is likely to be inflation related with the RBNZ’s measure of inflation expectations out on Wednesday and food & other price series for April on Friday. With Q1 CPI inflation at 3.1%, above the top of the RBNZ’s band, and core at 2.7%, more timely price indicators will be monitored closely given the effect of the Iran War on energy supplies.
• Options : Closest significant option expiries for NY cut, based on DTCC data:  none. Upcoming Close Strikes : 0.5970(NZD577m May 14), 0.6050(NZD401m May 14) - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 47 Points
• Data/Event: RBNZ Governor Breman to speak on a panel at IMF conference.

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Spot USD/CNH tracks near 6.7925/30 in early Tuesday dealings, up a touch from intra-session lows from Monday of 6.7899. CNH posted a modest gain for Monday's session, outperforming the tick up in the BBDXY index (0.11%). Firmer oil prices, as Trump stated the ceasefire with Iran is on life support, aided these trends. Spot CNH/JPY is back above 23.00, but short of Japan pre-intervention highs near 23.50. Spot USD/CNY finished up at 6.7956, while the CNY basket tracker was little changed at 99.68. 

• For spot USD/CNH, the proximity of Trump's visit to China (May 13-15), is likely helping keep the near term bias in the pair skewed to the downside. Technically there doesn't appear much in the way of meaningful downside support until the 6.70/6.75 region. The RSI (14) is nearing oversold territory, last near 30.84. Upside resistance is likely between the 20 and 50-day EMAs, which rest at 6.8230-6.8535 respectively. Yesterday's USD/CNY fixing made a fresh cycle low and will remain in focus of push back on CNY gains.
• As we argued yesterday, the broader macro backdrop is still supportive for the yuan, with upbeat data outcomes and returning upstream price pressures (which has coincided with higher yuan basket levels in the past). Goldman's also noted: "The Chinese yuan is more than 20% undervalued against the US dollar, according to Goldman Sachs Group Inc., which expects the currency to keep strengthening over the coming year." (via BBG).
• Trump posted via Truth Social a short while ago that he is looking forward to his China trip, where he said great things will happen for both countries. A wide variety of topics are expected to be covered around trade, Taiwan and the Iran conflict.
• Also note US Tsy Secretary will meet with China's He Lifeng in Seoul on Wednesday (after his meetings in Japan today with PM Takaichi and Finance Minister Katayama).  

• RES 3: 95.568 - 61.8% retracement Oct’ 25 - Jan’ 26 downleg
• RES 2: 95.465 - 50.0% retracement Oct’ 25 - Jan’ 26 downleg
• RES 1: 95.425 - High Dec 1 ‘25 (cont)
• PRICE: 94.975 @ 16:16 BST May 11
• SUP 1: 94.780 - Low Mar 23
• SUP 2: 94.664 - 76.4% retracement of the 2008 - 2020 rally
• SUP 3: 94.038 - 1.0% 10-dma envelope

Aussie 10-yr futures traded on a more stable footing Friday after undergoing several spells of weakness mid-week. Prices broke through resistance-turned-support at 95.040, the 23.6% retracement of the upleg posted off the March low. Resistance in focus at 95.120 into 95.425, while 94.780 undercuts as support.