10-year treasury yield hits 5-day low, pushes USD/JPY below 100-HMA

• The USD/JPY is exploring the downside  on speculation the Fed is nearing an end of the tightening cycle.  
• The pair is being guided lower, possibly by the 10-year treasury yield, which hit five-day lows soon before press time.  

Powell’s dovish speech continues to weigh over both the US Treasury yields and the greenback.

At press time, the 10-year treasury yield is trading at a five-day low of 3.03 percent, having shed four basis points yesterday. More importantly, the decline in the treasury yields is likely pushing the USD/JPY pair lower.

The currency pair dipped below the 100-hour moving average (HMA) of 113.41 a few minutes before press time and could slide further, as the double top breakdown seen in the 10-year treasury yield’s daily chart is signaling the path of least resistance is to the downside.

Fed Chair Jerome Powell, at 17:00 GMT yesterday, said the interest rates are just below the range of neutral estimates, squashing bets of an extended tightening cycle. As a result, the dollar will likely remain on the defensive. The downside in the USD/JPY, however, could be limited as increased prospects of fewer Fed rate hikes could put a strong bid under the global equity markets.

USD/JPY Technical Levels