USD/JPY drops to fresh session lows near 111.60 as Wall Street plummets
The USD/JPY pair came under strong bearish pressure in the last hour and lost more than 30 pips to renew its daily low at 111.64. As of writing, the pair is trading at 111.70, losing 0.2% on a daily basis.
The sharp drop witnessed in the major equity indexes in the U.S. and the 10-year T-bond yield shows that the risk-aversion is taking control of the market in the second half of the day. Reports of the U.S. House Judiciary Committee issuing document requests to 81 agencies, entities, and individuals for an investigation aimed at President Trump and members of his administration amid allegations of obstruction, corruption and abuses of power seems to be weighing on the market sentiment. At the moment, both the Dow Jones Industrial Average and the S&P 500 are losing more than 1% on the day despite starting the day in the positive territory.
Additionally, today's data from the U.S., which showed that construction spending contracted by 0.6% in December, reminded investors of the economic slowdown witnessed toward the end of the year. Although the greenback clings to its daily gains, a more-than-1% drop seen in the 10-year T-bond yield seems to be forcing the US Dollar Index to pull away from the two-week high that it set at 96.82 earlier in the session.
Technical levels to consider
The pair could face the initial support at 111.50 (200-DMA) ahead of 111 (100-DMA) and 110.35 (Feb. 27 low). On the upside, resistances are located at 112 (psychological level/daily high), 112.60 (Dec. 20, 2018, high) and 113.35 (Dec. 10, 2018, high).