USD/JPY drops below 113.00 despite record highs in Wall Street

Matías Salord FXStreet

USD/JPY tested earlier the 113.20 zone and failed to break higher. During the American session pulled back and dropped toward 112.60.

USD losses strength

The US dollar is retreating across the board on Tuesday. The Dollar Index reached earlier today 93.72, the highest level in one month and a half. At the moment of writing it was at 93.30, in negative territory for the day.

The greenback lost momentum amid a recovery in US bonds. The 10-year yield that yesterday hit the highest since July is falling today modestly to 2.332%. The yen was able to climb versus the US dollar despite risk appetite in Wall Street. The Dow Jones was up 0.33%, at record highs. The recovery of US dollar appears to be losing momentum ahead of US labor market data.

Technical levels

USD/JPY continues to hold a bullish tone on a wider perspective but the upside remains limited by the 113.20 zone. A break higher would reinforce the upside outlook while below 112.20 an extension of bearish correction seems likely.

To the upside, resistance levels might be located at 113.20/25 (Sep 17, 18 & Oct 3 high), 113.55/60 (Jul 14 high) and 113.95 (Jul 10 low). On the flip side, support could be seen at 112.65 (daily low), followed by 112.20 (Sep 29 low) and 111.85 (Sep 19 high).

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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