USD/JPY drops to test 110.50, weakest since Sept 2017
- USD selling gathers steam.
- Risk-off seeps back?
- Unfazed by rising USTs.
The recovery in the USD/JPY pair ran into resistances just shy of the 111 handle, triggering a sharp sell-off towards the midpoint of the 110 handle.
USD/JPY headed to 110?
The spot resumes its downbeat momentum, as the bears regain poise amid a fresh bout of selling-wave caught by the US dollar against its main peers, in the wake of the ongoing rally in the EUR/USD rally amid convergent monetary policy outlooks between the Fed and the ECB. The USD index slumps -0.43% to hit fresh thirty-seven months lows of 90.20.
Moreover, the latest leg lower can be partly attributed to a pick-up in demand for the safe-haven Yen, as the USD drop weighs negatively on the sentiment around the European equities.
Meanwhile, the major remains little affected by the earlier comments from the BoJ Governor Kuroda and higher Treasury yields, as the USD dynamics remain the main driver across the fx space today. No US data is due out later today as U.S. markets are closed are closed for Martin Luther King Jr holiday.
USD/JPY Technical View
Karen Jones, Analyst at Commerzbank, explained: “USD/JPY came under increasing downside pressure and has eroded the 110.85 end of November low. Failure here targets the 110.15 and 108.90 Fibonacci retracements and allows for a move to the 107.34 2012-2018 uptrend. Intraday rallies are indicated to fail 111.40/70. Initial resistance lies at 111.72/112.05. Above here lies the 113.64/75 December highs.”