USD/JPY in 2018 lows near 106.30 ahead of US docket

  • Spot stays under pressure around 106.30.
  • US 10-y yields tested cycle highs around 2.95%.
  • US docket next on tap.

The greenback remains entrenched into the negative territory so far this week and is now forcing USD/JPY to record fresh YTD lows in the 106.30/20 band.

USD/JPY now looks to US data

The pair is retreating since Monday amidst a generalized sell-off in the greenback despite yesterday’s higher-than-expected US CPI and the solid performance of yields in the US money markets.

That said, yields of the key US 10-year note rose to the highest level since January 2014 around 2.95%, although the up move rub out of steam soon afterwards. While market expectations keep pointing to 3-4 rate hikes by the Fed this year, the buck stays unable to pick up some sustainable recovery in response to the persistent uncertainty surrounding the US political scenario.

Later in the session, the Philly Fed index is due seconded by the NY Empire State index, producer prices for the month of January and the usual weekly report on US labour market.

USD/JPY levels to consider

As of writing the pair is losing 0.60% at 106.36 facing the next support at 106.16 (2018 low Feb.15) seconded by 102.54 (low Nov.3 2016) and finally 101.15 (low Nov.9 2016). On the other hand, a breakout of 108.51 (10-day sma) would expose 109.14 (21-day sma) and then 110.48 (high Feb.2).

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