USD/JPY tumbles to test 2017 lows as US bond rise

The Japanese yen gained momentum across the board during the American session and following the ECB meeting. Rising US bonds favored the Japanese currency. USD/JPY is testing 2017 lows. 

USD/PY break below 108.50

The pair resumed the slide after approaching 109.00. In the move down it broke below 108.45 (Sept 6 low) and bottomed at 108.12, the lowest since April. It remains near the lows, slightly above 108.10. A daily close around current levels would be the lowest since November 2016. 

USD/JPY accelerated the decline amid a rally in Treasuries. The 10-year yield dropped from 2.10% to 2.03%, the lowest since November 2016. A reduction in the expectations of another rate hike from the Federal Reserve during 2017 weakened the greenback. Taking into account Fed funds futures the odds of a December rate hike are at the lowest since May. 

Levels to watch 

To the upside, resistance level might be located at 108.45 (Sep 6 low), 108.95 (20-hour moving average) and 109.25 (daily high). On the flip side, support could be seen at 108.10/15 (2017 low),107.75 (Nov 14 low) and 106.95 (Nov 10 high).