USD/JPY hit fresh session low, what’s next?

The Dollar-Yen extended losses to hit a fresh session low of 113.67 on fears of global trade wars.

A moderate recovery from the early Asian session low of 113.73 quickly ran out of steam near 114.00 handle. Moreover, the 10-year treasury yield is down more than three basis points and that is keeping the USD under pressure.

As per the Bloomberg report, the quarterly correlation between the US yields and the Yen is near record highs.

Further losses likely

Trump promised to stir a "new national pride'' and protect America from the "ravages'' of countries he says have stolen US jobs. This combined with a lack of policy specifics is not only forcing markets to consider the possibility of trade wars, but also question the Trump trade.

Later today, European and US desks may hit the markets with fresh offers, leading to a further losses in the pair. The US calendar is light, hence the focus remains on the Treasury yields.

USD/JPY Technical Levels

The spot was last seen trading around 113.70 levels. A break below 113.13 (Dec 8 low) would expose 112.57 (last week’s low), under which the spot could target 111.99 (38.2% fib of Trump rally). On the other hand, breach of resistance at 114.08 (5-DMA) would open doors for 114.38 (50-DMA). A violation there would expose 115.00 levels.