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  • USD/JPY is defending 200-day moving average for the third straight day,
  • The key average could be breached by NY close, as treasury yields may drop on renewed concerns over the US economy.

USD/JPY is currently trading at 111.60, representing a 0.10 percent gain on the day, having picked up a bid near the 200-day moving average (MA) support of 111.51 earlier today.

Sellers failed to keep the pair below the long-term moving average for the last two sessions, but may succeed today if treasury yields slide in response to renewed concerns over the US economy.

Indeed, the world’s biggest economy expanded 3.2 percent year-on-year in the first quarter, the official data released on Friday showed. While the headline figure was a big beat on expectations, the details of the GDP report showed that inventory buildup, slide in imports and government spending was primarily responsible for the surge.

Experts believe the inventory buildup would act as a drag on the growth rate over the next few quarters. Further, consumer spending – the main engine of the US economy – slowed in the first three months and business investment cooled, triggering fears of deeper economic slowdown.

As a result, the Fed is unlikely to change its plans to maintain the status quo for the rest of 2019.

Hence, treasury yields may come under pressure, helping the JPY bulls secure a daily close in USD/JPY below the 200-day MA line. As of writing, the 10-year yield is seen flatlined at 2.5 percent.

Technical Levels