USD/JPY drops below 110, tests 200-DMA

The USD/JPY pair came in under a renewed selling pressure during the NA session and started to erase its daily gains. At the moment, the pair is trading at 109.90, where the 200-DMA is sitting, still up 0.7% on the day.

Although there were no fundamental catalysts that could potentially trigger that move, the fact that the US Dollar Index continues to remain below 99 may be allowing the pair to correct its daily gains. The increased risk appetite amid the outcome of the first round of the French presidential election has been the main reason why the JPY has been sold-off.

• USD/JPY: April nerves calming – Deutsche Bank

The macro data from the United States hurt the demand for the greenback as well. Both the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index came in below expectations. In the meantime, the equity indexes in the U.S. started the day with a bullish momentum but erased some of their earnings. After having recorded more than 1% gains, both the Dow and the S&P 500 indexes are back around +0.8%.

Technical levels to consider

The pair could face the immediate resistance at 110 (psychological level) ahead of 110.80 (Mar. 27 high) and 111.65 (50-DMA). On the flip side, supports could be encountered at 109.50 (Apr. 11 low), 109 (psychological level) and 108.10 (Apr. 17 low).

• JPY may no longer be the top performer against the dollar - Nomura