Has USDJPY Topped?

Has USDJPY Topped?

Has USDJPY Topped?

The U.S. dollar traded lower against most of the major currencies. There was no U.S. economic reports released this morning and no comments from U.S. policymakers. The U.S. dollar took its cue from Treasury yields, which declined approximately 5bp today. Yields have been slowly moving lower after peaking at 2.449% on December 1st and with no major U.S. economic reports on the calendar this week, rates could fall further into the weekend, leading to a deeper pullback in USD/JPY. We would not be surprised if the currency pair traded on the lower end of the 113 handle by the weekend on a fundamental basis.

Technically, USD/JPY could drop as low as 112 without threatening the broader uptrend. There’s near term resistance at 114.20 and more significant resistance at the December high of 112.85. The December 5th low of 112.88 is the main near term support level. If that breaks then USD/JPY should drop to at least 112 and possibly even the 20-day SMA at 111.50.

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