The dollar can’t find a bid this week.
One area to watch is the bond market. US 10-year yields are up 3 basis points today after rising 8 bps yesterday. The correlation between USD/JPY and US yields has been fairly tight over the past month.
USDJPY (white) 10s (orange)
The declines in stocks, bonds and the US dollar over the past 4 days could be a deleveraging trade as banks shore up capital ahead of potential regulatory changes or for some other reason. It could also be traders simply exiting leveraged positions ahead of vacations. Once it stabilizes, look for trades to bounce back.
In USD/JPY there are bids at 99.40/35 but the size is modest. More medium-sized bids at 99.20/10 but the strong demand is around 99.04/99.00.
