USD/JPY drops to 4-month lows near 109.50

The greenback remains on the defensive so far this week and is now dragging USD/JPY to fresh lows in the mid-109.00s, area last visited in September 2017.

USD/JPY in multi-month lows

Spot has quickly plummeted to fresh multi-month lows near 109.50 after US Treasury Secretary S.Mnuchin said a weaker USD is ‘good for trade’. In the same line, and following Trump’s recently announced measures, US Commerce Secretary W.Ross suggested that more remains in the pipeline regarding tariffs, collaborating with the downbeat sentiment around the buck.

The pair briefly climbed above the critical barrier at 111.00 the figure on Tuesday after BoJ’s H.Kuroda reasserted the need for accommodative monetary conditions, although the softer tone in the greenback prevailed eventually and dragged spot lower.

In the data space, Japanese advanced manufacturing PMI rose to multi-year tops at 54.4 for the month of January, while flash manufacturing/services PMI and existing home sales are due later in the US docket.

USD/JPY levels to consider

As of writing the pair is down 0.65% at 109.61 facing the next down barrier at 108.81 (low Jun.14 2016) followed by 108.27 (low Aug.29 2017) and then 107.33 (low Sep.8). On the other hand, a breakout of 110.71 (10-day sma) would open the door to 111.50 (high Jan.18) and finally 111.78 (200-day sma).