USD / JPY retraces and tests support in the 109.70 area

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  • Risk aversion drives the yen through the market.
  • USD / JPY clears Friday’s gains and returns to 109.70

The USD / JPY is falling on Monday after Friday’s bounce. The price fell to a low of 109.69 in one week, but then rebounded to 109.80. The yen and the dollar are among the best performing currencies, driven by risk aversion.

The Japanese is being the one that rises the most, also favored by the decline in Treasury bond yields. Wall Street futures point to an open with falls between 0.30% and 1%. In Europe, the decreases in the main places exceeded 2%. For its part, the 10-year rate of the US Treasury bonds loses more than 3% and is at 1.25%, a level not visited since February.

Without impact data in the US on Monday, the most relevant appears on Tuesday with the inflation report from Japan (consensus: 0.2% -annual-). However, the eye of the market will continue to be on what happens with the equity and bond markets.

Eyes at recent lows

The USD / JPY is testing the 109.70 zone, which contained the lows last week. A confirmation below would point to further declines in the pair, with the next relevant support being at the 109.50 area, where the July lows are.

To the upside, the dollar needs to return above 110.50, where the 20-day moving average is, to remove the downward pressures. This average has turned bearish, helping to reinforce the current bearish outlook.

Technical levels

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