USD/JPY drops sharply in tandem with Nikkei, back at 113.50

USD/JPY’s bounce from 5-DMA at 113.56 met stiff resistances lined up near 113.80 region, knocking-off the rate to fresh session lows of 113.50 last hour.

USD/JPY reverses, risk-off back in vogue?

The major came under fresh selling pressure over the last hour, as safe-haven flows for the yen picked-up pace amid a sharp reversal staged by the Japanese stocks from daily tops, with the Nikkei 225 index now meandering near lows of 19,917, down from 19,994 – daily highs.

Risk-off sentiment appears to seep back into markets, as investors digest the cautious remarks from the RBA reflected in its minutes, while a pause in the oil-price rally also turned markets nervous.

Moreover, renewed USD selling amid a drop in the treasury yields, especially the benchmark 10-year US yields, further added to the latest leg down in the major. The 10-year treasury yields drop -0.23% to fresh session lows of 2.331, while the USD index flirts with lows near 98.70.

Focus now shifts towards the US housing data, industrial production and mortgage delinquencies for fresh incentives on the major.

USD/JPY Technical levels                 

A break above 113.86 (May 15 high) would expose 114.50 (psychological levels) and 114.91 (Mar 15 high). On the other hand, a breach of support at 113.30 (classic & Fib S1) could yield a test of 113 (key support) and 112.49 (20-DMA).