USD/JPY falls by 1% in drop below post-Powell low

USD/JPY down by 1% on the day in a drop to 105.50 currently

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The drop to 105.50 now breaches the low seen in the whipsaw following Powell’s speech yesterday, which was at 105.61. Abe’s press conference earlier was rather bland, offering little hints about his successor but he did affirm that most policies should be continued.

Still, the yen is gathering further pace on the day with USD/JPY now seeing sellers take over near-term control after breaching below its 200-hour MA (blue line) @ 105.95. That helped to accelerate the decline alongside added dollar weakness on the session.

There is some mild support around 105.44-54 currently but the real threat for USD/JPY is if price action starts to approach the 105.00 handle once again.

There was a brief break below the figure level in late July trading, but that quickly turned around as Treasury yields turned a corner at the start of August.

But perhaps until we get more clarity surrounding the future of Japan’s political and economic outlook, the relative uncertainty could fuel some speculative bids in the yen.

Treasury yields also reversing course today isn’t helping with yen pairs as we see 10-year yields now pare its earlier rise in a fall to 0.745% – lows for the day – after having been up by more than 3 bps to 0.786% at the start of European morning trade.