USD/JPY corrects further lower under 104.00 as US yields decline

• US yields break to the downside during Yellen’s testimony.
• USD/JPY moving sideways above the 20-day SMA.

The USD/JPY retreated further from 104.07 and fell to 103.84, the lowest level since the Asian session. It is moving with a bearish bias, still positive for the day but off highs. A decline in US yields and a correction in equity prices weakened the pair.

In Wall Street, the Dow Jones is up by just 0.35%, and the Nasdaq gains 0.80%, both off highs. The correction lower took place as US yields also declined. The 10-year fell from 1.11% to 1.08% in a few minutes. A consolidation of the 10-year under 1.07% would point to lower levels, potentially boosting the yen.

The move took place as Janet Yellen speaks at the confirmation hearing in the Senate. She mentioned several times that with interest rates at historic lows, it is time to invest, to act big.

The US dollar is holding onto losses across the board. The DXY stands at 90.48, retreating after hitting on Monday the highest level in a month. The dollar’s decline kept the USD/JPY limited to the upside.

The pair continues to move sideways supported by the 20-day moving average, today at 103.55. A close under 103.50 would weaken the outlook for the dollar. On the upside, the key level is seen near 104.40, a downtrend line that should negate the current bearish bias if broken.

Technical levels