USD/JPY Current price: 111.00
- US Government shutdown adding pressure on the pair.
- Treasury yields collapse, yields curve flattening to levels last seen in 2009.
The USD/JPY pair shed over 150 pips daily basis, falling to 110.80 a level last seen in September this year. The yen soared on Wall Street plummeting to fresh yearly lows and US Treasury yields collapsing, as a result of the latest US Federal Reserve monetary policy announcement. Despite Chief Powell was far more hawkish than anticipated, the dot-plot showed that policymakers now foresee two rate hikes for 2019, down from the three forecasted a couple of months ago. The benchmark yield for the 10-year Treasury note fell to 2.75%, a fresh multi-month low and barely 10 basis points higher than the one of the 2-year note. Adding to dollar woes, President Trump refused to sign a spending bill to avoid a partial government shutdown, claiming his concerned for border security. The battle between the US President and the Houses over the approval of a $5 billion bill to fund the border wall.
The pair has not only broken below the 100 DMA in the daily chart but currently pressures the 200 DMA, this last at 110.85, providing an immediate dynamic support. Below it, the decline could extend to 110.37, September monthly low. In the 4 hours chart, the downward potential is quite strong despite technical indicators reached extremely oversold levels, with the RSI currently at 18, and the pair now developing over 200 pips below its moving average. Upward corrective movements can't be ruled out, but selling interest will likely reappear on approaches to the 111.50/60 price zone.
Support levels: 110.85 110.40 110.00
Resistance levels: 111.20 111.60 112.00
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