USD/JPY drops below 1H 200-MA on rising yield-led risk aversion

USD/JPY dipped below 1h 200-MA of 107.23.
Stocks turn risk-averse, tracking rising treasury yields.

Omkar Godbole FXStreet Contributor

The Yen picked up a bid in Asia, courtesy of the rising bond yield-led risk aversion in the equities.

The currency pair fell below the 200-hour moving average (MA) of 107.23 and printed a session low of 107.15. As of writing, the spot is trading at 107.27.

The Fed minutes released in the North American session triggered speculation the central bank is prepping for aggressive rate hikes. Consequently, the markets began pricing in a more hawkish Fed. The US 10-year treasury yield rose to a four-year high of 2.96 percent, pushing the stocks lower.

The Dow index closed lower by 150 points. Meanwhile, as of writing, stocks in Australia are down 0.10 percent. Also, Germany's DAX futures are pointing to a negative open.

Further, the risk aversion will likely worsen if the US 10-year treasury yield moves above 3 percent. So, corrective rallies in USD/JPY, if any, could be short-lived. Only a sharp drop in the treasury yields and the uptick in stocks could lift the USD/JPY pair.

USD/JPY Technical Levels

A break above 107.38 (upward sloping 1H 50-MA) would open up upside towards 107.58 (1h 10-MA) and 107.91 (overnight high). On the downside, breach of support at 107.15 (session low) would allow for a deeper sell-off to 106.84 (1h 100-MA) and 106.73 (50% Fib R of 105.55-107.91).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	High
1H	Bearish	Neutral	Expanding
4H	Bullish	Neutral	High
1D	Bullish	Neutral	Expanding
1W	Strongly Bearish	Oversold	High
Updated Feb 22, 02:00 GMT

Author

Omkar Godbole

FXStreet Contributor

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

EUR/USD flat lines below 1.1900; divergent Fed-ECB expectations offer support

The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1835-1.1830 region and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.1875 area, remaining nearly unchanged for the day and staying within striking distance of an over one-week high, reached on Tuesday, amid mixed cues.

GBP/USD slips heading into the Thursday trading window

The Pound Sterling pulled back from four-year highs on Wednesday, weighed down by a combination of Bank of England dovishness and UK political uncertainty, even as the US Dollar weakened on soft labor market revisions.

Gold posts modest gains above $5,050 as US-Iran tensions persist despite strong labor data

Gold price trades in positive territory near $5,060 during the early Asian session on Thursday. The precious metal edges higher despite stronger-than-expected US employment data. The release of the US Consumer Price Index inflation report will take center stage later on Friday.

Bitcoin holds steady despite strong US labour market

Bitcoin briefly bounced from $66,000 to above $68,000 but slightly reversed those gains following Wednesday's US January jobs report. The top crypto is hovering around $67,000, down 2% over the past 24 hours as of writing on Wednesday.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

XRP sell-off deepens amid weak retail interest, risk-off sentiment

Ripple (XRP) is edging lower around $1.36 at the time of writing on Wednesday, weighed down by low retail interest and macroeconomic uncertainty, which is accelerating risk-off sentiment.