USD/JPY dips below 108.00 as Treasury yields extend overnight losses

USD/JPY is under pressure on softer Treasury yields.
Trade tensions likely adding to bearish pressures.

Omkar Godbole FXStreet Contributor

USD/JPY continues to lose altitude in Asia with the US Treasury yields extending overnight losses.

The two-year yield, which tracks short-term interest rate expectations, fell 13 basis points to 1.81% on Wednesday, courtesy of dovish testimony by the US Federal Reserve President Jerome Powell.

As a result, the US Dollar was offered across the board. The USD/JPY pair fell from 108.99 to 108.33 in the overnight trade and remains on the defensive at press time with the two-year yield reporting losses at 1.82%. The yield hit a low of 1.79% earlier today.

As of writing, USD/JPY is trading at 107.95, representing 0.47% losses on the day.

Apart from the weakness in the US yields, the pair is likely feeling the heat of US-China trade tensions. With Chinese President Xi refusing to make explicit commitments on purchasing American farm products, clouds have gathered over the new rounds of US-China trade talks.

The pair may suffer a deeper drop during the day ahead if the equities turn red on trade concerns.

Pivot points

1. R3 109.51
2. R2 109.25
3. R1 108.86
PP 108.6
1. S1 108.21
2. S2 107.95
3. S3 107.56

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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