USD/JPY touches a session low of 106.25
The yen is gaining further ground as Treasury yields are falling back on the session. That is resulting in USD/JPY easing further towards a test of the 200-hour MA (blue line).
Bond yields gained some ground after better euro area data earlier but the respite is proving to be temporary and we’re seeing markets reverse course:
10-year yields are back down by 2 bps to 1.569% currently and is weighing on yen pairs across the board. European equities are also looking a bit shaky with the DAX down by 0.3% at the moment so that is also playing a role in sentiment here.
For USD/JPY, the 200-hour MA will be the next key level to watch out for as a break below that will see sellers regain near-term control. A further drop back below 106.00 will certainly give sellers more confidence in the sessions ahead.
That said, I reckon markets will be more cautious around these levels over the next two days as traders will have one eye on Jackson Hole and how the Fed focus at the event will influence Treasuries and expectations for the September meeting.