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  • USD/JPY turned red, hit a session low of 110.86 tracking the drop in the 10-year US Treasury yield.
  • The daily relative strength index (RSI) shows overbought conditions.

The USD/JPY pair is on the retreat, tracking the decline in the US 10-year treasury yield and due to overbought conditions.

As of writing, the pair is trading at 110.93, having a hit a session low of 110.84 a few minutes ago. The retreat from the overnight high of 111.39 could be associated with the drop in the 10-year treasury yield to a one-week low of 3.05 percent.  

The pullback in the US dollar and yield  does not come as a surprise as the 10-year yield had created a bearish outside-day candle on Friday, signaling the rallies in yields and US dollar are due for a correction.

Further, the 14-day relative strength index shows the pair is most overbought in over a year. Hence the probability of a deeper pullback in the USD / JPY pair is high.

USD/JPY Technical Levels

Acceptance below 110.60 (Friday’s doji candle low) would expose the 200-day MA lined up at 110.18 and support at 110.00 (psychological level). Meanwhile, resistance is seen at 111.07 (session high) would open up upside towards 111.39 (previous day’s high) and 111.65 (Oct. 16 low).