USD/JPY drops to lows near 110.40 ahead of Fedspeak

• The greenback loses momentum around the 110.40 region.
• US 10-year yields sidelined between 2.90%-2.91%.
• US NAHB index next on tap. Bostic, Dudley speak later.

After climbing to the 110.90 on Friday, USD/JPY has sparked a correction lower to the current 110.40 area, all sustained by increasing US-China trade tensions.

USD/JPY weaker on trade

Spot is losing some upside momentum as market participants continue to adjust to the recent US tariffs worth $50 billion in Chinese products and the subsequent retaliatory measures from China, which include 25% tariffs on more than 650 US products.

Furthermore, yields of the key US 10-year reference continue to meander the 2.90%-2.91% range so far today amidst a mild bias towards the risk-off sentiment.

News from the speculative community noted investors turned net longs once again after four consecutive weeks in the net-short territory, al during the week ended on June 5, as showed by the latest CFTC report. 

In the US data space, the NAHB index is coming in next seconded by speeches by Atlanta Fed R.Bostic (voter, centrist) and New York Fed W.Dudley (permanent voter, centrist).

USD/JPY levels to consider

As of writing the pair is losing 0.20% at 110.44 facing immediate contention at 110.25 (200-day sma) seconded by 109.19 (low Jun.8) and then 109.08 (55-day sma). On the upside, a break above 110.92 (high Jun.15) would open the door to 111.39 (high May 21) and finally 111.50 (high Jan.18).