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USD/JPY walks on a tightrope as lower yields underpin the yen


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USD/JPY faces a test of the 100-day moving average once again


ForexLive

Keep an eye out on USD/JPY in US trading later. The pair may not be as exciting as the euro or pound pairs so far this session but it will be a key one to watch as there could potentially be a technical breakdown.
Since moving above the 100-day MA (red line) in April, the pair has not managed a daily close below the level despite many attempts over the past few months. That indicates that buyers have been keeping the bullish bias and momentum alive despite several attempts by sellers to break the resolve.
Most recent tests to the downside has been related to a fall in US equities but so far today futures are holding up decently (E-minis are up 0.3% currently), although the same can’t be said for Treasury yields.
Bond traders are also responding to a possible dovish hike by the Fed tomorrow and earlier 10-year Treasury yields fell to its lowest levels since August. That is leading to continued downside pressure for USD/JPY on the day.
Right now, the tightrope for USD/JPY is that 100-day MA and if price falls off that level, it could potentially lead to a start of something ugly as buyers lose their bullish resolve.

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