USD/JPY analysis: holding below 110.00, bulls losing the grip

USD/JPY Current price: 109.94

• Plummeting equities and Treasury yields benefited safe-haven yen.
• BOJ Minutes and Kuroda speech scheduled for early Wednesday.

The USD/JPY pair plunged to 109.54 an almost two-week low on the back of mounting risk aversion after US President Trump asked the US Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10%. The Japanese currency got additional support from plummeting US Treasury yields, as the yield on the benchmark 10-year Treasury note fell to 2.85%, to stabilize around 2.88% late US afternoon. The pair attempted to regain the 110.00 threshold but failed, increasing chances of a downward extension for this Wednesday. Furthermore, and despite bouncing from intraday low, equities edged lower worldwide. In the upcoming Asian session, the BOJ will release the Minutes of its latest meeting, while Governor Kuroda will offer a speech, although market players are not expecting surprises there, and yields will likely continue to be the pair's main motor. Technically, the pair has broken below a key Fibonacci level, the 61.8% retracement of its latest daily slump at 110.15, now the immediate resistance, but holds above the 50% retracement of the same decline. In the 4 hours chart, the price is battling to regain ground above its 100 and 200 SMA, both converging a few pips below the current level, while technical indicators have bounced modestly from oversold readings, but present limited upward strength, suggesting that bulls are losing the grip. The immediate support is the daily low at 109.54, followed by 109.19, the low set last week. Below this last, bulls will probably give up and the pair could enter sell-off mode.

Support levels: 109.55 109.20 108.70

Resistance levels: 110.15 110.45 110.80

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