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  • US Dollar Index finds support before testing 96.50 area. 
  • 10-year US Treasury bond yield falls more than 1% 
  • Wall Street opens sharply lower on Monday as markets remain risk-averse.

The USD/JPY pair opened the week with a bearish gap and slumped to its lowest level since early October at 107.77 as the escalating conflict between Iran and the United States allowed the JPY to continue to find demand as a safe-haven. Nevertheless, despite the sour market mood, the pair erased early losses and turned positive on the day near 108.10 in the early trading hours of the American session.

PMI data helps USD rebound

The upbeat PMI data from the US helped the greenback gather strength in the last hours. The IHS Markit’s Services PMI improved to 52.8 in December’s final reading from 52.2 in the previous forecast and the Composite PMI edged higher to 52.7 from 52.2.

Supported by the upbeat data, the US Dollar Index, which touched a daily low of 96.54, reversed its direction and was last still down 0.18% at 96.72.

On the other hand, White House adviser Conway on Monday said that the US could still renegotiate a nuclear deal with Iran in an attempt to ease the tension. After opening sharply lower, Wall Street’s main indexes rebounded slightly but remain in the negative territory while the 10-year US Treasury bond yield is down more than 1% to help the JPY limit its losses against the buck.

Technical levels to watch for