USD/JPY stays near daily lows around 113.60
- Spot is trading in fresh 2-day lows.
- US yields drop to session lows around 2.40%.
- Attention to US PCE, data
The greenback is extending its bearish note vs. the Japanese counterpart at the beginning of the week, now dragging USD/JPY to the 113.60/50 band, or daily lows.
USD/JPY focused on US docked
The pair is losing ground for the second consecutive session so far following the soft tone in yields of the US money markets.
In fact, yields of the key 10-year reference have slipped back to the 2.40% neighbourhood on Monday, around 8 bps lower than Friday’s multi-month peaks in the boundaries of the 2.48% mark.
News that President Trump could favour dovish candidate J.Powell (vs. J.Taylor) to run the Federal Reserve from February has been weighing on the buck since Friday, pouring cold water over the USD-rally and forcing spot to recede from tops near the key 114.50 level.
However, spot is seen in a rangebound theme ahead of the BoJ meeting on Tuesday and the FOMC gathering on Wednesday. According to prior surveys, both central banks should keep their monetary stance unchanged.
On another direction, JPY speculative net shorts rose to the highest levels since July 25 during the week ended on October 24, as per the latest CFTC report.
USD/JPY levels to consider
As of writing the pair is losing 0.04% at 113.65 and a break below 113.36 (10-day sma) would open the door to 113.25 (low Oct.23) and then 112.92 (21-day sma). On the upside, the next resistance aligns at 114.45 (high Oct.27) seconded by 114.51 (high Jul.11) and finally 115.51 (high Mar.10).
