USD/JPY challenges lows near 112.60, US yields melting

USD/JPY has rapidly reverted the post-Payrolls spike to highs near 113.40, returning to the negative territory and flirting with lows in the 112.60/50 band.

USD/JPY weaker on US yields, looks to data

The pair is back to the red territory as market participants continue to digest January’s Non-farm Payrolls, with the economy adding more jobs than initially estimated (227K act. vs. 175K exp.) but both the jobless rate and Average Hourly Earnings have missed expectations.

US money markets, which remains very well correlated with the pair’s price action, have seen yields quickly tumbling to multi-day lows, particularly the 10-year benchmark, which came down to test the 2.43% area.

Later in the session, USD should remain in centre stage in light of the publication of Factory Orders followed by Markit’s Services PMI for the month of January and the ISM Non-manufacturing.

USD/JPY levels to consider

As of writing the pair is retreating 0.04% at 112.75 and a break below 112.04 (low Jan.31) would aim for 111.98 (38.2% Fibo of the November-December 2015 up move) and then 111.32 (low Nov.28). On the upside, the initial hurdle sits at 113.44 (spike Feb.3) followed by 113.97 (high Jan.31) and finally 114.11 (20-day sma).