USD/JPY hit fresh 6-week low of 109.99

USD/JPY took out 200-DMA support of 110.23 and dropped to 109.99; the lowest level since April 25.

Lower highs, lower lows established

The pair’s break below 110.23 (May 18 low) means the daily chart now has a lower highs and lower lows formation. The bid tone around the Japanese Yen strengthened in early Asia after Japan’s labor cash earnings were reported at a four-month high.

The overnight losses in the US equities and the risk-off tone in the Asian markets is also boosting the Yen. The 10-year treasury yield is down 1 basis point as well. The spot remains at the mercy of the broader market sentiment and the slope of the treasury yield curve.

USD/JPY Technical Levels

The lower highs, lower lows formation (break below 110.23) suggests the retreat from 114.37 (May high) has resumed. A break below 109.93 (38.2% Fib R of Nov high - Dec low) could yield a sell-off to 109.59 (Apr 25 low) and 109.00 (zero levels). On the other hand, resistance is seen at 110.23 (200-DMA + May 18 low), which, if breached would expose 110.78 (May 17 low) and 111.00 (zero levels). The daily RSI is below 50.00 and sloping downwards.