USD/JPY extends slide below 104.00 as US yields drop further

• USD/JPY hits fresh lows, even as Wall Street away from lows.
• US 10-year yield falls to 0.87%, lowest since December 1.

The USD/JPY dropped further and bottomed at 103.82, reaching the lowest level in a week. As of writing it trades at 103.90/95, down 20 pips for the week. The Japanese currency is among the top performers on Friday, supported by deterioration in risk sentiment.

Wall Street indexes are in negative territory but off lows. Despite the rebound, USD/JPY continued to trend lower. The decline in US yields supported the yen. The US 10-year yield fell to 0.87%, the lowest since December 1. The Dow Jones is falling by 0.15% and the Nasdaq by 0.45%, off lows but reflecting some risk aversion.

The lack of agreement regarding Brexit and fiscal stimulus in the US weighed on market sentiment. Regarding data, the Producer Price Index in the US rose less than expected in November while the Consumer Sentiment Index from the University of Michigan rose to 81.4 above the 76.5 of market consensus.

USD/JPY holds in the range

For the third week in a row, USD/JPY continues to trade sideways between 103.70 and 104.70. The main trend is bearish. A break above 104.70 would clear the way for a test of 105.00. If the greenback rises above 105.00, it could negate the bearish bias.

On the flip side, a firm break under 103.70 would add more pressure on the downside, exposing the November low at 103.15.

Technical levels