USD/JPY spikes down to 107.15 and rebounds toward the 107.90 area

• USD/JPY rebounds from daily lows as US dollar strengthens 
• DXY hits fresh one-week highs above 100.00 despite lower US yields. 

The USD/JPY pair dropped to 107.14 hitting a fresh daily low but it quickly rebounded, rising to 107.82. Volatility in the currency market spiked during the London fix. The move off lows and back near 108.00 took place as the US dollar strengthened. 

The greenback reached fresh highs versus commodity and main European currencies over the last hour. The DXY climbed to 100.12, fresh one-week highs. The dollar continues the bullish run it started on Wednesday despite the fact that US yields are lower on Thursday. The 10-year yield slide to 0.59%, lowest since April 3. 

Economic data from the US came in mixed compared to market expectations. The numbers continue to show a dramatic collapse in activity amid the coronavirus. Jobless claims remained above 5 million. “Even if everybody got through and the peak is behind us, the past four weeks have seen a total of over 21 million claims. That last number means that the economy wiped out all the positions created since the Great Financial Crisis”, explained Yohay Elam, analyst at FXStreet.

From a technical perspective, USD/JPY is moving sideways. The critical level to the downside appears to be the 106.90/107.00 area that offered support several times during April. On the upside, a recovery above 108.00 would alleviate the bearish pressure; the next resistance stands at 108.55/60. 

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