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  • USD/JPY offers little action from Japanese traders, stuck in a tight range in Tokyo’s opening hour.
  • USD/JPY consolidates the North American sell-off which extended yesterday’s drop from the 111.20s.

USD/JPY is stable in Tokyo, stuck in a tight range of between 110.52 and 110.58 at the time of writing, lacking a driver with the majority of the hard work done by the bears in North America. USD/JPY fell from above 111 in the Sydney morning to under 110.50 late NY.  

Powell’s testimony to a Senate committee reiterated the on-hold stance

US bond yields and the US dollar are lower despite solid US survey updates, as noted by analysts at Westpac, adding, “Fed Chair Powell’s testimony to a Senate committee reiterated the on-hold stance but there was interest in his focus on labour force participation. Powell noted that US participation rates were below those of comparable countries, suggesting scope for further robust job creation without stoking inflation.”

US yields heading lower

As for price action in the US 10yr treasury yield, it ended the day 2bp lower at 2.63% which puts it on track for a test of the bottom of this month’s range. The 2yr yield ranged between 2.48% and 2.50% and the futures markets see little chance of any further Fed rate hikes in this cycle, yields falling 1-2bp over the day.

USD/JPY levels

Valeria Bednarik, the Chief Analyst at FXStreet, explained that the pair returned to the comfort zone, where it traded most of the last week:

“Now challenging the base of the mentioned range and technically bearish according to the 4 hours chart, technical indicators entered bearish territory, extending their declines to fresh weekly lows, as the price pressures the 100 SMA at around 110.40.”  

“A break below the level should signal additional declines ahead with the market eyeing then a break below the 110.00 figure.”