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USD/JPY: Bears eyeing 200-DMA ahead of Fed minutes

  • Nikkei 225 index pares gains.
  • USD weakens in tandem with USTs
  • Headed for a test of 200-DMA at 111.51.
  • US data and FOMC minutes hold the key.

The USD/JPY pair came under renewed selling pressure over the last hour, as the USD selling picked-up pace across the board, with the market still weighing cautious remarks by the Fed Chair Yellen on the inflation outlook.

USD/JPY:  Risk-off seeps back?

The latest leg down in the spot can be also attributed to fresh demand seen in the Yen after the BOJ sources reported that the Japanese central is gradually dropping hints that it could scale back the stimulus earlier than expected.

Also, amid negative US rates and the Japanese stocks paring gains, the safe-haven flows for the Yen got a boost, knocking-off the major to fresh two-day lows of 112.16, with all eyes set on the next support of 111.88 en route 111.51 (200-DMA).

Meanwhile, the Nikkei 225 index eases to 22,550 points, still up +0.60% while the 10-year Treasury yields lose -0.22% to 2.356, keeping the USD index broadly subdued near 93.80 levels.

The pair now looks forward to the US data flow, with the key durable goods and FOMC minutes on the cards, which will provide fresh direction on the USD.

USD/JPY Technical View

Jim Langlands at FX Charts writes: “The short-term momentum indicators are still looking mildly positive, and on the topside resistance will again be seen at 112.70, ahead of 113.00, a break of which could see the dollar head back towards 113.15 and possibly on to 113.30. The daily momentum indicators are still pointing lower though and at some stage, we could yet see another run to levels below 112.00. Decent support lies in the 111.50/70 area where it might be worth trying buy some dollars if we ever see it down there.”

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