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USD/JPY slumps to weekly lows below 113 as Wall Street extends slide

  • Wall Street starts the day in red to reflect the risk-off mood.
  • US 10-year T-bond yield falls 0.8% on Monday.
  • US Dollar Index starts to erase last week's gains.

The USD/JPY pair continued to push lower in the early NA session and broke below the 113 handle for the first time in a week as the flight-to-safety allowed the JPY to gather strength against its rivals. As of writing, the pair was trading at 112.95, losing 0.38% on a daily basis.

With investors staying away from risk-carrying assets, Wall Street started the day under pressure and all three major indexes lost more than 1% in the first hour of trading before staging a modest rebound. As of writing, the Dow Jones Industrial Average and the S&P 500 both were losing 0.75% on the day. Furthermore, the falling US T-bond yields weigh on the positively-correlated the USD/JPY pair as well.

On the other hand, the US Dollar Index, which touched its highest level in nearly 18-months at 97.70 on Friday, lost its momentum on Monday to allow the pair to extend its slide. The only data from the U.S. today showed that the business activity in the manufacturing sector in the NY area expanded at a slower pace than expected in December.

  • NY Fed: Empire State Manufacturing Index falls to 10.9 in December vs 20 expected.

Technical levels to consider

The pair could face the first support at 112.65 (100-DMA) ahead of 112.20 (Dec. 10 low) and 111.75 (Oct. 29 low). On the upside, resistances are located at 113.10 (50-DMA), 113.50 (daily high) and 114 (Nov. 28 high).

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