USD/JPY hangs near three-week lows, just above mid-109.00s

USD/JPY added to the overnight post-US CPI losses and edged lower for the second straight day.
Disappointing Chinese data, COVID-19 woes benefitted the safe-haven JPY and exerted pressure.
Rebounding US bond yields underpinned the USD and helped limit any deeper losses for the pair.

Haresh Menghani FXStreet

The USD/JPY pair remained on the defensive through the Asian session and was last seen hovering around the 109.60-55 region, just above three-week lows touched on Tuesday.

The latest US inflation data released on Tuesday eased concerns for an earlier than expected tapering by the Fed and triggered a steep decline in the US Treasury bond yields. This, in turn, prompted some intraday US dollar selling and exerted heavy pressure on the USD/JPY pair.

Apart from this, Wednesday's disappointing Chinese macro data fueled worries about a global economic slowdown and benefitted the safe-haven Japanese yen. This was seen as another factor that led to some follow-through selling around the USD/JPY pair for the second successive day.

In fact, China's retail sales grew at the slowest pace since August 2020, while industrial output also rose at a weaker pace in August. The data further fueled worries about a global economic slowdown amid the recent spread of the highly contagious Delta variant of the coronavirus.

That said, a modest bounce in the US bond yields underpinned the USD and helped limit any deeper losses for the major, at least for now. The USD/JPY pair, for now, has managed to defend horizontal support near the 109.50-45 region, which should now act as a pivotal point for traders.

Market participants now look forward to the US economic docket, featuring the releases of the Empire State Manufacturing Index, Industrial Production figures and Capacity Utilization Rate. This, along with the US bond yields, will influence the USD and provide impetus to the USD/JPY pair.

Technical levels to watch

USD/JPY

Overview
Today last price	109.6
Today Daily Change	-0.09
Today Daily Change %	-0.08
Today daily open	109.69

Trends
Daily SMA20	109.89
Daily SMA50	109.93
Daily SMA100	109.83
Daily SMA200	108.02

Levels
Previous Daily High	110.16
Previous Daily Low	109.53
Previous Weekly High	110.45
Previous Weekly Low	109.62
Previous Monthly High	110.8
Previous Monthly Low	108.72
Daily Fibonacci 38.2%	109.77
Daily Fibonacci 61.8%	109.92
Daily Pivot Point S1	109.43
Daily Pivot Point S2	109.16
Daily Pivot Point S3	108.79
Daily Pivot Point R1	110.06
Daily Pivot Point R2	110.43
Daily Pivot Point R3	110.69

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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