USD/JPY extends rebound from key Fib, tests 5-DMA

The Dollar-Yen pair is extending the rebound from 111.613 (61.8% Fib ext. of Jan 3 high - Jan 24 low - Jan 27 high) in Asia, with 5-DMA at 112.14 offering resistance.

Focus on JGB yields

The US 10-yr fell to a three-week low, while the Australian 10-year yield dropped to the lowest since November. Bond yields across the globe are melting. Japanese bond yields are more likely to follow suit. Moreover, that would keep the US-Japan 10-yr yield spread from narrowing sharply.

Nevertheless, the weakness in the Yen is slightly surprising given the fact that the 10-yr treasury yield dropped close to seven basis points yesterday, while gold reached three-month high. Wall Street suffered losses as well.

Later in the day, US weekly jobless claims figure could influence the dollar side of the story.

USD/JPY Technical Levels

The spot was last seen trading around 112.10. A break above 112.14 (5-DMA) would expose hurdle at 112.83 (10-DMA). A daily close above the same may trigger short unwind, leading to quick spike to 113.95 (Feb 1 high). On the downside, a daily close below 111.613 (61.8% Fib ext.) would signal continuation of the sell-off from the January high of 118.61. Nov 28 low of 111.36 could offer support, which, if breached would expose 100-DMA level of 110.10.