USD/JPY remains heavily offered below 113.00 handle, struggles near session lows
| • A fresh wave of global risk-on trade/follow-through USD weakness prompts aggressive selling.
• The ongoing slide in the US bond yields/yield curve inversion adds to the USD bearish pressure.
• Mnuchin/Kudlow’s positive trade-related comments do little to provide any meaningful impetus.
The USD/JPY pair remained heavily offered through the early North-American session, albeit has managed to rebound around 10-20 pips from over one-week lows.
With investors looking past the latest optimism over the US-China trade truce, a fresh wave of global risk-aversion trade underpinned the Japanese Yen's safe-haven demand and prompted some aggressive selling.
Adding to this, a sharp fall in the US Treasury bond yields exerted some additional downward pressure on the already weaker US Dollar and further collaborated to the pair's steep intraday decline of over 90-pips.
Yields on the benchmark 10-year US Treasuries, dropped further below the 3% level, touching the lowest level since mid-September, while the curve between 2-year and 3-year notes inverted for the first time since 2007.
This against the backdrop of an already inverted yield curve between 2-year and 5-year notes failed to ease the prevalent USD selling bias, though oversold conditions on intraday charts helped limit further losses.
Meanwhile, some positive trade-related comments by the Treasury Secretary Steven Mnuchin and White House economic advisor Larry Kudlow extended some support but did little to impress the bulls.
In absence of any major market moving economic releases, broader market risk sentiment and the USD/US bond yield dynamics might continue to act as key determinants of the pair's momentum through the US trading session.
Technical levels to watch
Immediate support is pegged near the 112.65 level, below which the downfall could further get extended towards the 112.30 region en-route the 112.00 round figure mark. On the flip side, the 113.00 handle now seems to act as an immediate resistance, which if cleared might trigger a short-covering bounce towards the 113.45-50 horizontal zone.
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.