USD/JPY: yields keep retreating, yen stronger
|USD/JPY Current price: 112.71
- US employment data awaited ahead of NFP report Friday.
- Falling equities amid risk aversion also back the Japanese currency.
The USD/JPY pair nears weekly lows in the 112.50 price zone, once again weighed by weakening yields and plummeting equities. Hopes that China and the US will resolve their differences diluted as days went by, while tensions in Europe also hurt the market's sentiment. The dollar trades mixed across the board, much stronger against commodity-linked currencies that suffer from equities' declines but softer against the safe-haven Asian currency. The yield for the 10-year Treasury note fell through 2.90%, fueling concerns about a shrinking yield curve.
The pair is now waiting for US jobs-related data, ahead of Friday's Nonfarm Payrolls report. The country will release its usual weekly unemployment figures, the ADP survey on private employment, November Challenger Job Cuts and Q3 Nonfarm Productivity. Later in the day, the final versions of the Markit PMI and the official services one will be out.
The pair is short-term bearish due to the risk-averse environment but could change course with solid US data. Meanwhile, the 4 hours chart shows that the 100 and 200 SMA cap the upside in the 113.20 price zone as technical indicators recover some ground after nearing oversold readings. Still, and with the price a few pips above its daily low, chances of a recovery seem quite limited. Below 112.55, the pair has the next relevant support at 112.30, the low set last week, while below this last the downward momentum is set to accelerate.
Support levels: 112.55 112.30 112.00
Resistance levels: 113.35 113.60 113.85
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