USD/JPY fades spike above 111.00, treasury yield curve flattest since 2007

USD/JPY's retreat from 111.13 to 110.75 has kept the 2015-2018 falling trendline intact.
A convincing break above the long-term falling trendline remains elusive, likely due to relentless flattening of the Treasury yield curve.

Omkar Godbole FXStreet Contributor

The USD/JPY pair failed to scale the long-term falling trend line, likely due to flattening of the Treasury yield curve.

As of writing, the currency pair is trading at 110.80 - down 0.10 percent on the day. Meanwhile, as per the linear-scaled daily chart, the resistance of the trendline sloping downwards from the August 2015 high and December 2015 high is located around 111.00. So, the retreat from 111.13 to 110.75 has kept the trendline hurdle intact.

Treasury yield curve flattest since 2007

At press time, the spread between the US 10-year treasury yield and the 2-year treasury yield stands at 32 basis points - the lowest level since 2007. Further, the spread between the 10-year and 7-year treasury yield is closing on inversion (negative).

May consider the flattening of the yield curve or inverted yield curve as a sign of impending recession and hence it is likely capping USD's upside against the anti-risk Yen.

USD/JPY Technical Levels

Resistance: 110.63 (5-day moving average), 110.17 (200-day moving average), 110.00 (psychological level).

Support: 110.90 (June 15 high), 111.13 (session high), 111.40 (May high).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	High
1H	Bearish	Neutral	Expanding
4H	Bearish	Neutral	Low
1D	Bullish	Neutral	Shrinking
1W	Bullish	Overbought	Low
Updated Jul 3, 04:00 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.

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