US yields down a huge 4.44%: USD/JPY headed to 110.50 on stops breaking sooner than later?
Currently, USD/JPY is trading at 111.14, down -1.76% on the day, having posted a daily high at 113.15 and low at 111.10.
USD/JPY remains better offered despite the huge downside over the Trump debacle in the making as markets are hastened to be pricing in so far. The news that Trump has been interfering with FBI investigations is not only damaging to the political atmosphere surrounding his presidency, but the economy is fragile still and the markets were banking on fiscal policy this year. Should the Fed factor these risks into their agenda, it could be game over for the US dollar as expectations of the Fed increasing rates while the US economy begins to derail when a lack of confidence fuels a decline on Wall Street - this is the risk that analysts at Nomura explain in the following: What does this "Trump news" mean for US markets? - Nomura
US yields, for the meantime, have been the driving force in the yen's advance as well as risk appetite falling off a cliff. US yields are now down 4.30% at 2.2225% with a range of 2.2225%-2.3046% vs a close of 2.3257%. This will underpin the downside in USD/JPY in a sustained bearish trend ahead of today's Japanese GDP. Just this week, Bank of Japan Governor Haruhiko Kuroda said he was "quite sure" the central bank could smoothly exit from its massive monetary stimulus when the appropriate time to do so came which boosted the yen. Today's data will be keenly watched for any improvements.
All the latest on Trump:
- US Dollar tumbles further on Trump jitters
- US: Trump’s travails starting to weigh on the dollar – ING
- US: Trump headlines stealing the show – Deutsche Bank
- Rep. Adam Schiff: Impeachment cannot be perceived as an effort to nullify the election by other means
- US Rep. Al Green: The President Must Be Impeached
- US House Speaker Ryan: Need the facts on Comey & Russia reporting - LiveSquawk
- US Rep. Al Green: Today, I will call for the impeachment of the President
USD/JPY levels
The outlook is, of course, bearish on a technical and funda basis. When the two marry, we can see extended move sin the yen as fast as we are seeing in these current market conditions. The yen is on course for a break of the 111 handle now in an extension of the reversal of the April-May rally that failed to reach the 61.8% Fibo retracements of the December-April decline at 114.64, and its subsequent, decisive break of the 50% level (113.40) calls attention to the 38.2% Fibo at 112.15 as an upside resistance on any corrections. However, as the pair continues to drop with yields differentials narrowing at lightening speed, watch stops until 110.50 and 23rd April highs.