USD/JPY drops sharply in tandem with T-yields, 110.50 eyed

• Takes a sharp U-turn on rejection near 111.20 levels.
• BoJ’s Kuroda plays down Yen strength.
• Slump in Treasury yields weighs.

The Yen buyers have returned to the markets, knocking-off the USD/JPY pair back below the 111 handle, as markets digest the BoJ Governor Kuroda’s comments delivered at the post-meeting press conference.   

The spot continues to enjoy good two-way price movement, with the prices headed back for a retest of the 111.50 barrier on a failure above the 111 handle again, as BoJ Chief Kuroda’s comments on the recent Yen appreciation and optimistic inflation outlook overshadowed the dovish remarks concerning the QQE exit.

The latest leg down in the major can be also attributed to a fresh selling-wave caught by Treasury yields across the curve, with 10-year Treasury yields extending its retreat from multi-year tops of 2.672%, as markets shrug-off the US government reopen.

Amid a lack of fresh fundamental catalysts, the pair will remain at the mercy of the USD dynamics and risk trends while the dust settles over the BoJ aftermath.

USD/JPY Technical Levels

A move above 111.22 (Monday’s high) would open doors for 111.41 (38.2% Fib R of Jan. 8 high - Jan. 17 low) and 111.48 (Jan. 18 high). On the other hand, a breach of support at 110.49 (Jan. 19 low) would open downside towards 110.19 (Jan. 17 low) and 110.00 (zero levels).