USD/JPY breaks below 111.00 despite higher US T-bond yields

USD/JPY falls on the back of broad US dollar weakness.
The market mood is in risk-off mode spurred by US political uncertainties and China-related issues.
US ISM Services PMI for September is expected lower than the August reading.

Christian Borjon Valencia FXStreet

On Monday, the USD/JPY reached a fresh six-day low around 110.81 but bounced off, trading at 110.96, barely down 0.05%, as the Asian session kicks in.

The market sentiment is downbeat, as witnessed by US stock market losses, between 0.9% and 2.2%. Further, safe-haven flows towards the Japanese yen, the Swiss franc, and gold weakened the greenback across the board.

The market sentiment dented by different factors

Meanwhile, the US 10-year benchmark note rate rose by one and a half basis points (bps), finished at 1.481%, up from 1.464% Friday’s close. The greenback measured by the US Dollar Index, which tracks the performance of the US dollar against its peers, lost 0.25%, trades at 93.80, for the first time since last Friday.

US political uncertainties around the debt-ceiling and the infrastructure spending bill also weigh on investors’ confidence. The Democrats supposedly are considering scaling back the spending package to improve its odds of being approved. Further, escalating tensions between the US and China dampened the market sentiment on China faltering to fulfill the phase one trade promises.

On the macroeconomic front, the Japanese economic docket will feature September figures for the Tokyo CPI, which are expected unchanged.

On the US front, the Trade Balance for August and the ISM Services PMI for September could offer fresh impetus for USD/JPY traders

USD/JPY Price Forecast: Technical outlook

Daily chart

The USD/JPY recent fall is testing the 38.2% Fibo retracement from the 109.11/112.07 swing low/high. A daily close beneath that level could open the way for further losses. The first support level would be the 50% Fibo retracement at 110.60, followed by the 61.8% Fibo retracement at 110.24 and then 110.00.

On the other hand, a daily close above 111.00 would resume the upside bias, with the first target being 112.00.

The Relative Strength Index (RSI) is at 57, aiming higher, supporting the upside bias.

ADDITIONAL KEY LEVELS TO WATCH

USD/JPY

Overview
Today last price	110.96
Today Daily Change	-0.06
Today Daily Change %	-0.05
Today daily open	111.02

Trends
Daily SMA20	110.25
Daily SMA50	110.01
Daily SMA100	110
Daily SMA200	108.45

Levels
Previous Daily High	111.49
Previous Daily Low	110.91
Previous Weekly High	112.08
Previous Weekly Low	110.54
Previous Monthly High	112.08
Previous Monthly Low	109.11
Daily Fibonacci 38.2%	111.13
Daily Fibonacci 61.8%	111.27
Daily Pivot Point S1	110.79
Daily Pivot Point S2	110.56
Daily Pivot Point S3	110.21
Daily Pivot Point R1	111.37
Daily Pivot Point R2	111.72
Daily Pivot Point R3	111.95

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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