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USD/JPY drops to fresh lows around 114.00

  • Spot came under pressure on softer US yields.
  • Upside appears capped around 114.70, daily highs.
  • Fed-BoJ policy divergence expected to keep driving sentiment.

After hitting fresh tops in the 114.70 region during early trade, USD/JPY has now come under renewed downside pressure and is testing daily lows in the 114.00 neighbourhood.

USD/JPY focused on US yields

The pair is extending its soft pace for the third consecutive session so far today, following Friday’s doji candle and losing momentum after testing fresh 8-month tops round 114.70 during the Asian trading hours.

Spot came down following the drop in yields of the US 10-year reference from daily highs beyond 2.35% to the vicinity of the 2.32% handle, as market participants continue to digest October’s payrolls figures released last Friday.

On the positioning front, JPY speculative net shorts increased to the highest level since July 25, as per the latest CFTC report during the week ended on October 31.

Data wise today, NY Fed W.Dudley (permanent voter, centrist) will be the only event in the US calendar today.

USD/JPY levels to consider

As of writing the pair is up 0.02% at 114.09 and a break above 115.51 (high Mar.10) would target 118.61 (2017 high Jan.3) and finally 118.67 (high Dec.15). On the other hand, the next hurdle aligns at 113.86 (10-day sma) seconded by 113.20 (21-day sma) and then 112.97 (low Oct.31).

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