USD/JPY: stabilizing below key 21-D SMA and 112 handle

USD/JPY is currently111.96  having made a high of 111.97 and a low of 111.83.

USD/JPY opened with a bearish gap that has since been filled and trades sideways in the Tokyo open. USD/JPY, however, broke out of the recent and familiar ranges on the 112 handle in a move below the 21-DMA. The post CPI data low was at  111.69.  Also, the US 10-year yield continues to appear to be a powerful contemporaneous indicator of the dollar-yen exchange rate, as analysts at Brown Brother Harriman noted:

"The correlation between the two, on a percentage change basis appears to be near a record high. The US 10-year yield fell 13 bp since the post-US jobs data high near 2.40%.  It has fallen through its 20-day moving average for the first time in over a month.  The dollar recorded its lows against the yen for the year on September 8, the same day the 10-year yield bottomed just above 2.0%."

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USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the daily chart indicates that the pair settled below the 23.6% retracement of its September rally, but also noted that technical indicators entered negative territory with sharp downward slopes:

"The 100 and 200 DMAs are converging horizontally between the current price and the 38.2% retracement of the previous month's rally, this last at 111.10. Shorter term, and according to the 4 hours chart, the pair presents a neutral-to-bearish stance, now developing below its 100 SMA, but above the 200 SMA, while technical indicators head marginally lower within negative territory," Valeria noted.