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  • USD/JPY is trading in the red at press time, having breached the double top neckline support in the North American session.  
  • Treasury yields fell yesterday on ECB’s dovish turn.  
  • ECB pushed out rate hike to 2020, confirming market fears that the bloc is headed for a deeper economic slowdown. The risk assets, therefore, could remain under pressure, helping JPY gain altitude.  

USD/JPY is losing altitude in Asia, possibly tracking the overnight drop in the treasury yields and worsening risk sentiment.  

At press time, the pair is trading at session lows near 111.45, having breached the double top neckline support of 111.64 in the overnight trade.  

The 10-year US treasury fell seven basis points to 2.63 percent yesterday, making the dollar a less attractive bet after the European Central Bank (ECB) pushed out rate hike to 2020 and offered new loans to banks. The futures on the S&P 500 index are also down 0.20 percent.

Further, ECB’s dovish turn failed to put a bid under the risky assets. Germany’s DAX and UK’s FTSE fell 0.5 percent each and the Dow Jones Industrial Average dropped 0.8 percent.  

Notably, the risk aversion seems to have hit the Asian shores. As of writing, Nikkei is reporting a loss of 1.36 percent. Meanwhile, names like S&P/ASX 200 and Kospi are also flashing red.  

As a result, safe havens like Treasuries and the JPY may continue to attract haven demand ahead of the US non-farm payrolls data, scheduled for release at 13:30 GMT.  

Technical outlook on USD/JPY, however, remains bullish while the pair is held above 111.0/50, writes FXStreet Analyst Ross J Burland.

Technical Levels