USD/JPY intermarket: yields and VIX are the driving forces / Yen up +0.52% on the day at 111.77

Currently, USD/JPY is trading at 111.77, down -0.52% on the day, having posted a daily high at 112.55 and low at 111.63.

USD/JPY is testing the downside again and is making some scope for significant fresh lows beyond the psychological 110 handle. risk-off play and volatility will support the the safe-haven currency despite the measures that the BoJ are committed to in either weakening their currency and creating inflation with a target to move above 2% in CPI terms. The key driver is the DXY and rates fuelled by the fundamentals that are the geopolitical risks driving investors towards traditional bonds, weighing on the dollar and suppressing yields. There was a sharp spike in the VIX today that forces the yen lower and that correlation is significant this year so far. However, there is some stability back and the yen is levelling out, albeit in bearish territory below the 112 handle with 10-year yields slumping to 2.34 at the time of writing. 

USD/JPY levels

USD/JPY has started to erode theUSD/JPY is back below the  38.2% retracement at 111.98 area and the 112.02 April highs for third attempt and is in highly bearish territory. Analysts at Commerbank argued that this suggests scope to the base of the cloud, which lies at 109.92 and, if seen, they look for this to hold (this is also the 50% retracement of the move up from November). "However," they added, "We also note that the recent move lower continues to indicate that this is the end of the corrective move (this is the case on all the intraday charts as well), we also note the daily RSI has not confirmed the move lower. Initial resistance lies at 115.10 (imoku 2) and this will need to be regained in order to alleviate downside pressure and reintroduce scope to key short-term resistance offered by the 16-month resistance line at 118.15."