USD/JPY is currently offered down to the mid point of the 111 handle and into congestive territory that should offer the bulls some support against the grain.
USD/JPY was unable to hold onto whatever bid it managed to find at the end of last week's business and on the back of a solid nonfarm payrolls report in the U.S. and a surprise positive in the ISM manufacturing in the same U.S. session.
However, the overriding issue is now not to do with jobs growth, as Yellen emphasized in her speech to the Economics Club of NY, approximately 20 times in fact through mention of the concerns around the strength of the dollar and global growth. "So trivial details like a steadily tightening US labour market and a steadily growing US economy don't matter much," explained Kit Juckes, economist at Societe Generale.
Also, and noted by Valeria Bednarik, chief analyst at FXStreet, the Japanese yen strengthened all through last Friday, fuelled by a sharp decline in the Nikkei 225, after the Tankan report showed that business confidence among large manufacturers declined sharply from +12 in Q4 to +6 in Q1, reaching its lowest level since Q2 2013.
USD/JPY levels
"In the 4 hours chart the technical indicators retreated from their mid-lines, and maintain strong bearish slopes, indicating the pair may fall further, particularly on a break below 111.50, the immediate support….It will take further gains beyond the 112.60 region to see take off some of the bearish pressure on the pair, and signal some further short term gains."
(Market News Provided by FXstreet)