USD/JPY drops below 106 as 30-year US T-bond yield hits fresh record low


  • Markets turn risk-averse in the last hour, US T-bond yields turn south.
  • Wall Street's main indexes erase early gains, dip into negative territory.
  • US Dollar Index continues to float above 98 handle. 

A fresh wave of risk-off flows hit the markets in the last hour and dragged the USD/JPY pair below the 106 handle. As of writing, the pair was trading a couple of pips above that level, up 0.12% on the day.

Changes in market sentiment impact the pair

Although there were no fresh catalysts that may have caused the market sentiment to turn sour, investors struggle to find a reason to move away from safer assets. The strong demand for the US 10-year Treasury bonds dragged their yields to the lowest level in nearly three years and the yield on the 30-year reference dropped to a record low of 1.94%. Reflecting the dismal mood, Wall Street's main indexes retraced their early gains and are now posting modest losses.

On the other hand, the USD stays relatively strong against its major rivals despite the slump seen in the T-bond yields and keep the pair afloat in the positive territory.

Today's data from the US showed that retail sales in July increased by 0.7% on a monthly basis to better analysts' estimate of 0.3% and provided a boost to the currency. Moreover, the NY Fed's Manufacturing Index improved to 4.8 in August from 4.3 and the Philly Fed Manufacturing Index came in at 16.8 to beat market expectation of 10. At the moment, the US Dollar Index is up 0.2% on the day at 98.15.

There won't be any macroeconomic data releases from Japan on Friday and the University of Michigan's Consumer Confidence Index will be featured in the US economic docket. Nevertheless, the market's risk perception is likely to continue to dominate the pair's action ahead of the weekend.

Technical levels to watch for

USD/JPY

Overview
Today last price 106.02
Today Daily Change 0.11
Today Daily Change % 0.10
Today daily open 105.91
 
Trends
Daily SMA20 107.26
Daily SMA50 107.78
Daily SMA100 109.21
Daily SMA200 110.16
Levels
Previous Daily High 106.77
Previous Daily Low 105.65
Previous Weekly High 107.09
Previous Weekly Low 105.26
Previous Monthly High 109.01
Previous Monthly Low 107.21
Daily Fibonacci 38.2% 106.08
Daily Fibonacci 61.8% 106.34
Daily Pivot Point S1 105.45
Daily Pivot Point S2 104.99
Daily Pivot Point S3 104.33
Daily Pivot Point R1 106.57
Daily Pivot Point R2 107.23
Daily Pivot Point R3 107.69

 

 

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