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USD/JPY drops sharply from 1-week highs as USD retreats

  • DXY plummets from 1-week high to 3-day lows. 
  • US 10-year yields test 2.40% and retreats. 
  • Dow Jones at new record highs above 24,000. 

The USD/JPY pair lost more than 50 pips during the American session. After the release of US economic data, it tested daily highs above 112.40 and then turned to the downside. It bottomed recently at 111.72. As of writing, is at 111.85, marginally lower for the day. 

The sharp slide was triggered by a decline of the greenback across the board. The move followed a report from The New York Times mentioning that the White House is planning to replace Secretary of State Tillerson with CIA Chief Pompeo. Also, some month-end flows were another potential factor behind USD retreat. Earlier, the US personal income and spending report showed inflation figures (PCE price index) in line with expectations. 

While USD/JPY is retreating, the Dow Jones remains above 24,000 up 0.55% and the 10-year yield below 2.40%. While the improvement in risk appetite could weaken the demand for the yen, lower bond yields offer support. 

Technical levels 

To the downside, below daily lows immediate support could be seen at 111.70 (Nov 27 high), 111.35 (Nov 23 high / Nov 29 low) and 111.05 (Nov 23 low). On the upside, the FXStreet's technical confluence indicator detects resistance areas at 112.85, 113.30 and 113.80. 

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