The Japanese yen gained momentum
The Japanese yen gained momentum across the board during the last hour amid a decline of US equity indexes and a rally in US bonds. USD/JPY fell from 113.50 and bottomed at 112.95, hitting the lowest level since May 8. The pair is trading at 113.15, attempting to move off daily lows but still remains under pressure.
Yesterday’s recovery was short-lived and the US dollar resumed the decline, extending the correction after reaching 1-month highs last week at 114.36.
The recent slide took place amid a rally in US bonds. The 10-year yield tumbled to 2.30%, the lowest since May 3. In Wall Street, the Dow Jones failed to hold to gains and is down 0.03% while the S&P 500 drops 0.12%.
Te pair remains weak in the short-term. If the US dollar manages to rise above 113.50 (20-hour moving average) it could remove some negative momentum. The next key resistance is around 114.00: a consolidation on top could lead to a test of last week highs.
“Despite the absence of directional strength, the risk remains towards the downside as long as selling interest contains rallies on approaches to the 114.50 region, while a break below the mentioned support, should favor a bearish extension towards the 112.00 region, a long term Fibonacci support”, said Valeria Bednarik, Chief analyst at FXStreet.