USD/JPY sees aggressive selling as treasury yields slump, 101.50 eyed

The recent USD/JPY selling spiral found extra legs after the European equities dived into the negative territory, as uncertainty over Italian banks resurfaced and spooked markets, boosting the safe-haven demand for the JPY.

USD/JPY aims to test 101.50

The Japanese currency picked-up significant strength against its American counterpart post-European session, as risk-off moods intensified amid tumbling oil prices along with the European equities. At the time of writing, USD/JPY drops -0.85% to fresh five-day lows at 101.70, while the pan-European benchmark, the Euro Stoxx 50 slides -1.20%.

Moreover, the latest leg lower in the major can be attributed to the falling US treasury yields, with the benchmark 10-year treasury yields slumps over 6% to a record low of 1.3766% on increased flight to safety as well as on fading hopes of a Fed rate hike this year.

Next of note for the major remains the US factory orders and Fed official Dudley’s speech due later today for further impetus on the pair.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 102 (round number). A break above the last, the major could test 102.46/52 (10 & 5-DMA). While to the downside, the immediate support is seen at 101.52 (Jun 28 Low) and below that at 101 (round figure).