Saturday, April 21, 2018
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USD/JPY hits fresh 5-day lows near 112.20, what’s’ next?
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  • Yen regains poise on risk-off.
  • Fresh USD selling adds to the downside.

The USD/JPY pair replicated the bearish moves seen in Asia a day before, although the catalyst for the selling-wave remained different this time.

USD/JPY headed to 112?

The spot stalled its overnight recovery near 112.80, and from there met fresh supply to hit a five-day low of 112.17. Fresh bids emerged near the last, now prompting a tepid recovery near 112.30 levels.

The latest leg lower in the major can be attributed to a renewed risk-off wave that gripped the Asian markets, as the safe-haven Yen regained poise on the reports that North Korea refused to budge on nuclear stance in talks with South yesterday. Also, news of a 7.8 M earthquake that hit Puerto Rico weighed down on the investors’ sentiment.

Adding to the downside in USD/JPY, the US dollar came under renewed selling pressure versus its major peers, reversing a part of yesterday’s solid rebound, as 10-year Treasury yields stalled its rally.

The pair fell sharply from above the 113 handle on Tuesday, after the BoJ announced a reduction in its daily JGBs purchases to JPY 190 bln of 10 – 25 Year JGBs compared to 200bn yen last.

Markets will take cues from the broader markets sentiment in absence of first-tier macro news from the US today.

USD/JPY Technical View

Valeria Bednarik, Chief Analyst at explained: “In the 4 hours chart, the price is developing now below its 100 and 200 SMAs, both lacking directional strength, while technical indicators pared their declines near oversold readings and turned higher, although with very limited strength upward,” Valeria added, continuing, “below the mentioned daily low, the pair will likely retest the 112.00 price zone, from where it bounced multiple times since early December.”

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