USD/JPY: fragile on U-turn in US yields, loses 104 handle

USD/JPY has been pressured in late US trade, falling from 104.37 down to 103.78 lows so far.

USD/JPY is now basing as US traders square for the Asian handover although the price is in a precarious position here albeit within support of the ascending channel from 102.80. The DXY was softer with US 10yr treasury yields dropping from 1.81%, a five-month high, to 1.76%, retracing most of the previous day's rise. Markets could now be pricing in an on-hold Fed for 2016 given Yellen's dovishness on Friday that has potentially ruled out a hike in November.  The next key data will be with the U.S. shift in the form of US CPI inflation, "Annual headline inflation is tending toward target as base effects become positive. Core CPI inflation remains above the Fed's 2%yr target," explained analysts at Westpac.

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USD/JPY levels

USD/JPY has lost its footing close to the September high at 104.32 and May lows at 105.55. Analysts at Commerzbank suggested that slips should find support between the 102.79 September 21 high and the 55 day moving average at 101.90.

Meanwhile, with spot trading at 103.87, we can see next resistance ahead at 103.90 (Hourly 100 SMA), 104.03 (Hourly 20 EMA), 104.08 (Daily Classic PP), 104.20 (Monthly High) and 104.20 (Weekly High). Support below can be found at 103.87 (Weekly Classic PP), 103.79 (Daily Low), 103.72 (Hourly 200 SMA), 103.67 (Daily Classic S1) and 103.61 (Yesterday's Low).

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