Search ForexCrunch
  • Japanese yen rises across the board amid lower US yields and some risk aversion. 
  • USD/JPY heads for lowest close since late October. 

The USD/JPY dropped further after the beginning of the American session and tumbled to 108.19, the lowest level since November 4. As of writing trades at 108.25/30, 60 pips below the daily high. 

Earlier today, boosted by risk appetite the pair peaked at 108.86 and then lost strength. Later, as US yields turned to the downside and despite the recovery in DXY it started to decline. The negative momentum intensify as the 10-year yield drop to 1.85%, the lowest in two weeks. 

Equity prices in Wall Street remain in positive territory but off highs. The Japanese currency is among the top performers. Over the last hours, USD/JPY extended the decline also affected by a retreat of the greenback. The DXY moved off highs, retreating back below 96.60. 

US data came in slightly below expectations. The Markit Manufacturing PMI stood at 52.4 in December, marginally below the preliminary reading of 52.6. The data did not affect the greenback. More likely, USD/JPY move further lower amid geopolitical concerns regrading North Korean and Iran. Recently, US Defense Secretary Esper mentioned that there are indications that Iran backed forces may be planning more attacks. 

Levels to watch

From a technical perspective, USD/JPY looks increasingly weak, particularly if it holds under 108.30. A test of 108.00 seems on the cards and below the next support might lie at 107.75. 

On the upside, 108.45 is the immediate resistance now, followed by 108.85 and then 109.20. The critical level continues to be the 109.70 area: a consolidation above would signal more gains ahead.