USD/JPY stalls recovery, back to test 110 handle ahead of NFP

With the Japanese stocks and Treasury yields trimming gains, the USD/JPY pair faces fresh sellers and now looks to test daily lows of 109.93 on a breach of 110 handle.

USD/JPY: Risk-off back in vogue?

The spot stalled its Asian recovery mode just shy of the daily pivot located at 110.23, as a renewed risk-aversion wave appears to have gripped Asia amid negative oil prices, while investors remain wary ahead of the US payrolls data due later in the NA session.

Hence, the demand for the risk assets such as the equities, oil, Treasury yields etc. takes a back seat, with markets preferring to hold their capital in the safety bets such has the Yen.  Japan’s Nikkei 225 index pares gains to now trade sub-16,700 levels, while the benchmark 10-year Treasury yields move-off highs to trade at 2.127% so far.

Moreover, the JPY bulls remain unperturbed by the increase in BOJ’s Japanese government bond (JGBs) buying today, leaving the pair meandering near 110 handle. All eyes now remain on the key US NFP data for fresh trading impetus.

USD/JPY Technical levels                 

To the topside, a daily close above 110.58 (daily classic R1) would shift risk in favor of a re-test of 110.86 (50-DMA) beyond which 111 (round number) would be back on sight. A break below 109.88 (5-DMA) would open doors for 109.62/57 (10 & 20-DMA). A break lower would yield a test of 109 (classic S3).