USD/JPY tumbles to test 105.00, hits lowest in a week

• US Dollar Index falls toward 90.00, even as US yield move off lows.
• Improvement in risk sentiment does not provide support for USD/JPY.

The USD/JPY broke under 105.20 and fell to 104.98, hitting the lowest level since February 15. The pair is trading around 105.00, testing the critical area as the US dollar falls across the board.

During the American session, the greenback lost ground across the board, extending losses versus majors, and trimming gains against some emerging market currencies. A decline in US yields weakened the dollar, but not even a rebound over the last hours, helped the dollar. The DXY is trading at 90.04, the lowest level in a month.

The US 10-year yield stands at 1.35% after finding support at 1.32%. Earlier on Monday, it reached 1.39%, the highest level in a year. “Although we expect US Treasury yields to keep rising, we doubt that the pattern of the past week – sharp increases in real yields more than offsetting falls in inflation compensation – will last”, said analysts at Capital Economics.

In Wall Street, the recovery of equity prices could have limited the decline in USD/JPY. The Dow Jones is now in positive territory, rising by 0.09% after trading most of the day with losses. The Nasdaq is still sharply lower, falling 1.82%.

Technical levels