USD/JPY analysis: recovering alongside yields, bearish

Valeria Bednarik FXStreet

USD/JPY Current price: 112.73

The yield on the benchmark 10-year Treasury note fell to 3.04%, the lowest for this month.
USD/JPY still holding above its 100 DMA at around 112.00, a major psychological support.

The USD/JPY pair fell to 112.30, a fresh November low, in the risk-averse environment, later bouncing to turn positive for the day and settling above the 112.60 level. A collapse in Italian government bond yields extended into US ones, with the yield on the benchmark 10-year Treasury note falling to 3.04%, also the lowest for this month. However, the bleeding stalled in the US afternoon, recovering to 3.06%, Monday's close, helping the pair to bounce. Equities sunk worldwide, with US indexes nearing yearly lows. During the upcoming Asian session, Japan will release the All Industry Activity Index for September, foreseen falling monthly basis by 0.8% following a 0.5% advance previous.

The current recovery falls short from changing the negative tone present in the 4 hours chart, as the pair is developing below its 100 and 200 SMA, as technical indicators are correcting oversold conditions, heading higher but still below their midlines. The 100 DMA remains as a key support around 112.00, the barrier bears need to break to take over the pair. In the 4 hours chart, the 100 SMA maintains its bullish slope around 113.35, acting as bullish breakout point.

Support levels: 112.55 112.00 111.65

Resistance levels: 112.95 113.35 113.70

View Live Chart for the USD/JPY

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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