USD/JPY tumbles to 2-day lows near 108.80

  • USD/JPY looks weaker below the 109.00 hurdle.
  • US Retail Sales surprised to the downside in February.
  • US Industrial Production contracted more than expected.

The corrective downside in US yields lends some buying interest to the Japanese yen and drags USD/JPY back below 109.00 the figure on Tuesday.

USD/JPY looks to yields

USD/JPY corrects lower following three daily advances in a row and slips back below the 109.00 hurdle after recently failing to extend the upside momentum further north of the 109.50 area, levels last visited in June 2020.

The steep climb of the pair follows the sharp increase in US yields seen in past weeks. Indeed, yields of the key US 10-year benchmark rose well past the 1.60% region earlier in the week. The last time these yields traded at that level was back in February last year.

Later in the week, the Bank of Japan is seen keeping the monetary policy stance unchanged, although investors still have in mid a potential increase of the bond purchase programme later in the year, particularly if the growth prospects deteriorate in the wake of the pandemic.

What to look for around JPY

The yearly rally in USD/JPY navigates its third consecutive month, sharply bouncing off January’s lows in the vicinity of 102.50. The pair’s upside remains mainly sustained by the improved sentiment in US yields, which in turn appears underpinned by higher inflation expectations in the US. Furthermore, the mega-loose stance from the BoJ – which is seen in place for the foreseeable future - also collaborates with the softer yen, while speculative net longs in the safe haven have been scaled back strongly in past weeks.

Key events in Japan this week: Trade Balance figures (Wednesday) – Inflation figures/BoJ Monetary Policy meeting (Friday).

USD/JPY levels to consider

As of writing the pair is losing 0.24% at 108.86 and faces the next support at 103.33 (low Mar.10) seconded by 107.18 (20-day SMA) and then 106.22 (high Feb.17). On the upside, a surpass of 109.36 (2021 high Mar.15) would aim to 109.85 (monthly high Jun.5 2020) and finally 110.00 (psychological level).

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD battles with 1.1700 as the market mood turns sour

Poor German data and renewed concerns about a default of the Chinese Evergrande property giant undermined investors’ sentiment, pushing them into the dollar’s safety.


GBP/USD accelerates its slump, trades around 1.3650

GBP/USD is under strong selling pressure, trimming most of its post-BOE gains. Concerns about the global financial health and slow moves towards tapering weigh on markets.


XAU/USD hangs near multi-week lows, around $1,745 ahead of Powell

Gold struggled to capitalize on its attempted intraday recovery move. Hawkish Fed/BoE, rising bond yields acted as a headwind for the metal. Resurgent USD demand exerted additional pressure on the commodity.

Gold News

PBoC imposes ban on crypto trading as it fosters ‘illegal financial activity’

PBoC bans crypto trading activities and a plethora of associated services, labeling it “illegal.” Overseas cryptocurrency exchanges providing services to Chinese residents will be investigated in accordance with the law. 

Read more

Evergrande, VIX and yields make for choppy day ahead

Equity markets remain focused on Evergrande as rumours of a possible default on overseas debt swirl. The market appears to be on the hunt for negative news, which leads us to conclude that stocks are going lower in the short term.

Read more