USD/JPY stages mild recovery, short term target at 113.00
- USD/JPY pressured by USD weakness
- US yield curve flattest in over 10 years
- USD/JPY technicals point at bearish continuation
USD/JPY has staged a tepid recovery off lows, last trading at 112.75, with the pair having recently benefited from persistent weakness in the US Dollar and an end of year sell-off in US stocks.
Flattening of the US yield curve weighs on USD/JPY
Valeria Bednarik, Chief Analyst at FXStreet, notes: " Yields traded mostly lower Friday, the last trading day of the year. The yield on the benchmark 10-year Treasury note settled at around 2.41%, while the yield on the 30-year Treasury bond ended at 2.76%, both 2 basis points lower from their previous close. The 2-year note yield ended the year at 1.89%, leaving the yield curve between the two-year and the 10-year notes at the flattest level in over ten years."
USD/JPY technicals stay bearish
Technically, Valeria notes: "The daily chart shows that the bearish momentum persists, as technical indicators keep heading south within negative territory, albeit the pair bounced from near its 100 DMA, which now acts as an immediate dynamic support at 112.40. Technical readings in the 4 hours chart also favor a downward extension, to be confirmed on a break below the mentioned low, as the price holds around its 200 SMA, but well below the 100 SMA, while technical indicators stand within negative territory, gaining downward traction. "