USD/JPY drops to test 112.50, risk-off back in vogue?

The USD/JPY pair failed to push through 113 levels on yet another occasion, and from there moved lower, now flirting with fresh daily lows of 112.57.

USD/JPY down to 10-DMA at 112.54

The spot broke its Asian consolidative mode to the downside, as the Yen buyers returned to the markets, expectant of some optimistic remarks on the economy heading into the Japan MoF, BOJ and FSA meeting today.

Moreover, fresh selling seen in the US dollar across the board amid sagging Treasury yields collaborated to the latest leg down in USD/JPY. The USD index rebound faltered once again near 93.40 levels, sending the rate back towards daily lows of 93.09.

Further, the Yen also derives support from the latest report from Goldman Sachs, in which the US banking giant upgraded the Japanese Q3 growth forecasts.

Markets looked past the firm US macro releases, as focus now remains on the Fedspeaks and US dataflow, which includes the weekly jobless claims, trade balance and factory orders data.

USD/JPY Technical levels                 

To the topside, a daily close above 112.75 (5-DMA) would shift risk in favor of a re-test of 113 (round number) beyond which 113.50 (psychological levels) would be back on sight. A break below 112.02 (20-DMA) would open doors for 111.45 (200-DMA). A break lower would yield a test of 111.09 (100-DMA).