- The pair drops and tests 109.30 earlier in the session.
- Yields of the US 10-year note move higher to the 2.76% area.
- FOMC meeting, trade talks to rule sentiment later in the week.
After bottoming out in the boundaries of the 109.30 region during early trade, USD/JPY has managed to regain some attention and reclaim the mid-109.00s.
USD/JPY looks to trade, Fed
Despite the ongoing rebound, spot is down for the second session in a row on Monday, coming under renewed selling pressure following last week’s peaks in the critical 110.00 neighbourhood.
In the broader picture, the multi-week sideline theme in the pair seems well in place and continues to track the equally flat performance in yields of the key US 10-year reference.
Moving forward, spot should remain under pressure in light of the upcoming US-China trade talks (expected to resume on Wednesday and Thursday in Washington) and the FOMC meeting on Wednesday, where consensus appears tilted towards a somewhat dovish tone from the Federal Reserve.
USD/JPY levels to consider
As of writing the pair is losing 0.05% at 109.48 and a breach below 109.26 (low Jan.28) would aim for 109.03 (21-day SMA) and then 107.77 (low Jan.10). On the other hand, the next up barrier aligns at 109.99 (2019 high Jan.23) followed by 111.23 (200-day SMA) and then 111.40 (high Dec.26 2018).
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