USD/JPY erases gains and falls below 117.50

USD/JPY turned to the downside and erased gains amid a decline in equity prices on Wall Street. The pair that earlier rose to 117.80, the highest level since Thursday, is now trading below 117.50, testing daily lows. 

The decline took place as the Dow Jones index moved away from the 20,000 mark and dropped below 19,900; it was at 19,865 down 0.38% for the day, at the lowest in a week. In the bond market, US yields moved to the downside. The 10-year yield dropped to 2.519%, the lowest since December 14 (when the Federal Reserve rose the Fed Funds rate by 25 bp). 

The Japanese currency gained momentum across the board and is now among the top performers of the day, favored by falling yields and equity prices. Volume in financial markets remains low. 

Technical levels 

The recent decline pushed the price below a short-term trendline, opening the doors for a bearish correction. To the downside, support levels might be located at 117.35 (daily low), 117.15 (Dec 23 low) and 116.50/55 (Dec 19 low). On the upside, resistance now could be seen at 117.55 (uptrend line), 117.80 (daily high) and 118.25 (Dec 20 high).

USDJPY Forecast 2017: Kuroda will need to work alongside with Trump