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USD/JPY gives up gains as T-yields drop

  • Three-day winning streak comes to a halt on weak T-yields.
  • Eyes US ISM data.

The treasury yields continue to control the movement in the USD/JPY exchange rate.

As of writing, the 10-year treasury yield is down more than two basis points (bps) to 2.39 percent. The yield curve (spread/difference between the 10-yr yield and the 2-yr yield) has narrowed to 60.6 basis points.

So, the USD is losing altitude. The USD/JPY pair now trades at 112.40; down 0.11 percent on the day. It clocked a high of 112.69.

The spot risks falling further if the US ISM manufacturing PMI prints below estimates and more importantly, the details reveal weakness in the job growth.

USD/JPY Technical Levels

A move below 112.32 (daily low, support on 1-hour) would mark double top violation on 1-hour chart. The bears could then attack 111.95 (target as per the measured height method). A break below would expose 1-hour 200-MA level of 111.72.

On the upside, a move above 112.69 (daily high) would expose 111.84 (50-day MA) and 113.26 (Sep. 27 high).

 

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