USD/JPY deflates from tops near 109.40, back near 109.00

• Gains appear capped near 109.40.
• Spot found support near 108.40.
• JPY propped up by risk-off mood.

USD/JPY has eased from daily tops near 109.40 on Tuesday and is now returning to the 109.00 neighbourhood amidst a strong risk-off sentiment.

USD/JPY bounced off 108.40

The pair briefly tested multi-day lows in the proximity of 108.40 during early trade, dragged lower by the increasing demand for the safe haven JPY.

In fact, the global rout in riskier assets stays unabated on Tuesday amidst growing fears of a pick up in inflationary trends, particularly following the recent results from the US labour market published last Friday.

Today’s drop in spot has been accompanied by a sharp fall in yields of the US 10-year reference, testing sub-2.70% levels after climbing to the area just shy of 2.90% at the beginning of the week.

In the US data space, trade balance figures, JOLTs job openings and the speech by St.Louis Fed J.Bullard (neutral, 2019 voter) are all due later in the NA session

USD/JPY levels to consider

As of writing the pair is losing 0.05% at 109.04 and a breakdown of 108.46 (low Feb.6) would open the door to 108.28 (2018 low Jan.26) and finally 108.11 (low Apr.17 2017). On the flip side, the next hurdle lines up at 109.32 (high Feb.6) seconded by 109.78 (high Jan.26) and then 110.17 (21-day sma).