USD/JPY keeps the red territory near 106.50
- The pair’s upside faltered just below the 107.00 handle.
- US 10-year yields deflate from tops near 2.91% to nearly 2.89%.
- US CPI (Tuesday) and Retail Sales (Wednesday) next of relevance.
The Japanese safe haven currency is gathering upside traction at the beginning of the week and is now forcing USD/JPY to test the area of 106.50, closer to daily lows.
USD/JPY attention to US data
The pair is reverting two consecutive daily pullbacks today, as the risk-on sentiment seems to be easing some ground after the recent pick up, particularly on Friday in response to the latest US Payrolls.
Spot appears decoupled from the performance of yields in the US money markets, which are now probing the area of daily lows in the 2.88% neighbourhood after climbing as high as the 2.91% handle earlier in the session.
In the meantime, the broader risk appetite trends appear as the main driver behind the price action around JPY for the time being, ignoring the ‘lower-for-longer’ stance from the Bank of Japan and relegating the US interest rate path to a secondary role. As long as the appetite for riskier assets remain under pressure, it seems unlikely that JPY could recede ground on a sustainable basis.
From the speculative community, JPY net shorts retreated to the lowest level since October 3 2017 during the week ended on March 6, as shown by the latest CFTC report.
Data wise, US inflation figures gauged by the CPI (Tuesday) and Retail Sales (Wednesday) will be the salient events during the first half of the week.
USD/JPY levels to consider
As of writing the pair is losing 0.23% at 106.56 and a breakdown of 106.39 (10-day sma) would aim for 105.53 (low Feb.16) and finally 105.25 (2018 low Mar.2). On the other side, the immediate up barrier aligns at 107.06 (high Mar.9) seconded by 107.69 (high Feb.27) and then 107.92 (high Feb.21).
