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USDJPY: Pair Plunges amid Negative Sentiment, Lower Yields

06 December 2018

The USDJPY pair declined sharply on Thursday and was trading 0.80% weaker during the US session, hovering below 112.40.

US bond yields plummeted again on Thursday, which dragged the USDJPY lower with them. The 10-year yield is now at 2.85% and the 30-year trades at around 3.12%. Moreover, the short-term yield curve remains inverted, confirming the risk-off sentiment.

Apart of the bad sentiment investors also paid attention to some macro data, including the ADP employment report for the month of November, which fell short of expectations and slowed to 179,000 from 225,000 in November. It seems that the job growth has peaked in the US.

Moreover, the ISM from the non-manufacturing sector continued to improve and printed 60.7, up from 60.3 previously, while analysts had expected 59.2. Finally, factory orders decline 2.1% month-on-month, well below 0.2% scored previously. The greenback remained near the lows of the day after these numbers.

The USDJPY pair is now testing the 100-day moving average at 112.25 and if broken, bears could push the pair further lower to 111.80, where previous lows are located. On the upside, the first resistance is at 112.65 and afterward at 113.25. The outlook seems bearish as sentiment probably wont improve anytime soon. 

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Peter Bukov

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