USD/JPY drops to 1-month lows near 126.30 as yields decline

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  • Demand for bonds rises as the global economic outlook deteriorates.
  • US stocks fall on Tuesday, further boosting the yen.
  • USD/JPY breaks out of range and extends pullback from multi-year highs.

The USD/JPY ended days of consolidation with a sharp drop on Tuesday. The pair broke below 127.00 and fell to 126.34, the lowest level in a month. It remains close to the lows, pressured by risk aversion.

USD/JPY’s decline gained momentum on the back of US dollar weakness, lower yields and Wall Street stocks turning red. The Dow Jones falls 0.83% and the Nasdaq 2.78%. The US 10-year yield stands at 2.73%, a four-week low, while 30-year yields are back below 3%.

US economic data disappointed expectations (PMI and new home sales) and weighed on the dollar. DXY falls 0.37% and trades at 101.70, the lowest level in almost a month.

Analysts at MUFG Bank see the USD/JPY pair with a bearish bias, moving in the 122.00/129.50 range for the next few weeks. “The main risk to our bearish outlook for USD/JPY would be that global growth concerns ease in the month ahead. A pick-up in Chinese growth could be a potential trigger. Commodity prices and a possible stabilization of global equity markets should support a rise in USD/JPY, even if the dollar weakens more broadly.Yen weakness, however, would be more evident against currencies. of high beta raw materials.

If USD/JPY continues the decline, below the 126.30 support line, 126.00 is the next target, followed by 125.75 (11-12 Apr high). A recovery would now face immediate resistance at the 127.00/05 area. Above, the next one could be seen at 127.60 and then comes a downtrend line at 128.30.

Technical levels

USD/JPY

Panorama
Last Price Today 126.76
Today’s Daily Change -1.15
Today’s Daily Change % -0.90
Today’s Daily Opening 127.91
Trends
20 Daily SMA 129.26
50 Daily SMA 125.89
100 Daily SMA 120.54
200 Daily SMA 116.54
levels
Previous Daily High 128.07
Previous Daily Minimum 127.16
Previous Maximum Weekly 129.78
Previous Weekly Minimum 127.02
Monthly Prior Maximum 131.26
Previous Monthly Minimum 121.67
Daily Fibonacci 38.2% 127.72
Daily Fibonacci 61.8% 127.51
Daily Pivot Point S1 127.36
Daily Pivot Point S2 126.8
Daily Pivot Point S3 126.44
Daily Pivot Point R1 128.27
Daily Pivot Point R2 128.63
Daily Pivot Point R3 129.18

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Source: Fx Street

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