USD/JPY reverses from multi-year highs and falls to the 130.00 zone
- US dollar losses strength as US yields drop from multi-year highs.
- DXY hits fresh lows on American hours, backs away from the fresh multi-year high.
The USD/JPY rose earlier on Monday to 131.34, reaching the highest level since 2002 and then lost strength. During the American session, it turned to the downside and recently accelerated falling to 130.09, the lowest since early Friday.
The pair is hovering around 130.35, modestly lower for the day. It moved far from the peak after suffering another failure holding above 131.00 showing difficulties extending the rally. A sign that could be suggesting some consolidation or a correction ahead. So far the downside has been limited to 130.10. The next support stands at 129.70 and then 129.30. A daily close bell above 131.00 should open the doors to more gains.
When USD/JPY peaked on Monday US yields reached fresh multi-year highs. As the decline in stock markets continue, demand for Treasuries improved, sending yields lower. The US 10-year fell from 3.20% to 3.07%. The moved weighed on the dollar that lost momentum.
The Dow Jones is falling by 1.39% and the Nasdaq by 3.12%. In Europe, the CAC 40 lost 52.75% and the DAX 2.15%. The risk aversion environment helped the dollar more than the yen during most of the trading hours, but as US yields pull back, the scenario is changing, favoring the yen.