- Upbeat US data, stock markets fail to lift USD.
- USD/JPY hit a 4-month low of 110.58
- 10-year T-yield holds above 2.5 percent.
USD/JPY cut through the support of 110.84 (Nov. 27 low) and fell to a four-month low of 110.58, indicating the correlation with the US 10-year yield has broken down.
The spot has been losing altitude since Jan. 8 (113.39 high), despite 10-year moving above 2.5 percent. Meanwhile, the 2-year yield has jumped close to 75 basis points since early September. Still, the currency pair is increasingly looking heavy, which indicates the correlation with the rate differentials is breaking down.
Also, the pair failed to catch a bid wave after Friday's upbeat US retail sales and core CPI data. Even the risk-on action in stocks isn't helping the greenback.
Reuters report says attention has likely shifted to potentially accelerated policy normalization from other major central banks or an untimely end to the current economic cycle from the Fed being forced to hit the brakes as Dudley suggests. Or both.
That said, the spot look set to extend losses to 110.00 levels. As of writing, the spot is trading at 110.66 levels.
USD/JPY Technical Levels
A break below 110.15 (61.8% Fib R of Sep-Nov rally)would open doors for a cut through 110.00 (zero levels) and a drop to 109.55 (Sep 15 low). On the higher side, breach of the hurdle at 110.84 (Nov. 27 low) could yield a corrective rally to 111.18 (session high) and 111.39 (5-day MA).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remains deep in the red below 0.6500 on US-China trade risks
AUD/USD remains under heavy selling pressure below 0.6500 in the Asian session on Tuesday, reversing some losses. Trump's threatened additional 10% tariffs on China, weighinmg heavily on risk sentiment and the China-proxy Australian Dollar while lifting the haven demand for the US Dollar.
USD/JPY ranges around 154.00 as US Dollar strength offsets risk aversion
USD/JPY remains confined in a familiar range at around 154.00 in Tuesday's Asian trading. Fresh tensions surrounding US-China trade war underpin the safe-haven US Dollar, limiting the risk-off sentiment-driven gains in the Japanese Yen. Fed Minutes are next in focus.
Gold rebounds from one-week low of $2,605 on likely US-China trade war
Gold price rebounds toward $2,650 in the Asian session on Tuesday, having hit weekly lows at $2,605 in early dealings. US President-elect Donald Trump announced tarrifs on Canada, Mexico and China, effective from January 20, ramping up the safe-haven flows into the bright metal.
TRON Foundation becomes the largest investor in Donald Trump's World Liberty Financial
Donald Trump-backed DeFi platform, World Liberty Financial, received new support on Monday after Tron founder Justin Sun announced that the Tron Foundation had invested $30 million into the president-elect's platform, making them its largest financial supporter.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.