USD/JPY falls to a session low of 106.00, tests the 200-hour moving average
The yen is making decent ground in the European morning so far amid a slide in bond yields as investors side with a more cautious tone displayed by equities earlier on. US 10-year yields are down by 2 bps to 1.474% while US futures are down by 0.8% currently.
That is putting pressure on yen pairs across the board with USD/JPY challenging a break back below the 200-hour MA (blue line) now.
Hold below that and sellers will regain near-term control with a move below the 106.00 handle being eyed for further conviction in building more downside momentum.
As it stands, markets are starting to fade some of the optimism last week as US and China are still struggling to set up talks this month.
As mentioned at the time, month-end rebalancing flows may be a factor in propping up yields/equities so perhaps we're also seeing those effects correct back now. I was leaning on the skeptical side of risk trades last week and that hasn't changed as of yet.
Given the current global backdrop, I would still expect the yen and gold to outperform in long-run but trade and central bank headlines will definitely cause some bumps every now and then in the mean time.
