USD/JPY edges lower toward 106 after US yield curve inversion


  • US 10-year T-bond yield falls below 2-year T-bond yield on Wednesday.
  • S&P 500 Futures erases nearly 1% ahead of Wall Street opening.
  • Dollar weakens slightly, US Dollar Index edges lower below 97.70.

The yield curves of the 10-year and 2-year Treasury bonds inverted for the first time since 2007 earlier today and caused markets to turn risk-averse. After spending the first half of the day moving in a tight range near 106.50, the USD/JPY pair lost its traction and touched a fresh session low of 106.12 after this development. At the moment, the pair is down 0.5% on the day at 106.20.

At the moment, the 10-year T-bond yield is down 3.27% on the day at 1.625, sitting slightly below 1.628%, the yield on the 2-year reference. In addition to the fact that this is seen as a strong sign of an upcoming recession, markets are also keeping eye on the Federal Reserve's rate cut expectations.

Eyes on market sentiment

Although yesterday's headlines surrounding the US-China trade conflict showed that markets were pricing virtually a no-chance of a 50 basis points rate cut in September, the probability is now around 15% according to the CME Group's FedWatch Tool. Meanwhile, the US Dollar Index is now losing 0.12% on the day at 97.70, staying slightly above the session low that it set at 97.67 in the last hour.

In the second half of the day, investors will be paying close attention to Wall Street's performance to understand the impact of this development on the market sentiment. At the moment, the S&P 500 Futures is down nearly 1% on the day, suggesting that major equity indexes in the US are likely to start the day deep in the negative territory.

Technical levels to watch for

USD/JPY

Overview
Today last price 106.19
Today Daily Change -0.55
Today Daily Change % -0.52
Today daily open 106.74
 
Trends
Daily SMA20 107.36
Daily SMA50 107.83
Daily SMA100 109.26
Daily SMA200 110.2
Levels
Previous Daily High 106.98
Previous Daily Low 105.07
Previous Weekly High 107.09
Previous Weekly Low 105.26
Previous Monthly High 109.01
Previous Monthly Low 107.21
Daily Fibonacci 38.2% 106.25
Daily Fibonacci 61.8% 105.8
Daily Pivot Point S1 105.54
Daily Pivot Point S2 104.35
Daily Pivot Point S3 103.63
Daily Pivot Point R1 107.46
Daily Pivot Point R2 108.17
Daily Pivot Point R3 109.37

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD drops below 1.11 amid upbeat US data, trade concerns

EUR/USD is trading below 1.11 after robust US housing figures and solid consumer sentiment figures were published. Earlier, the common currency suffered from the concerns of new US tariffs on the EU.

EUR/USD News

GBP/USD down 100 pips after UK retail sales badly disappoint, amid USD strength

GBP/USD has plunged below 1.3050 after UK retail sales badly disappointed with a fall of 0.6% in December, on top of downward revisions. Odds of a BOE cut have risen.

GBP/USD News

Crypto market hyperspace mode On

The secondary actors of the crypto-sphere awaken and rally hard. Leading coins battle with greater resistance at the gates of a full bullish market. The only risk is an over-shoot, but that sentiment remains neutral.

Read more

Gold looks to close week flat below $1560

The XAU/USD pair climbed to a fresh daily high of $1560 in the early trading hours of the American session but struggled to preserve its momentum.

Gold News

USD/JPY: Losing bullish momentum but retaining gains

Chinese encouraging data kept markets in risk-on mode at the beginning of the day. The US January Michigan Consumer Sentiment Index is seen at 99.3, matching December figure. USD/JPY holding at the upper end of its weekly range could correct lower.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures