USD/JPY sinks to lows near 113.30 on USD selling

The selling pressure around the greenback is gathering traction at the beginning of the week, now dragging USD/JPY to test fresh lows in the 113.30 region.

USD/JPY in 3-day lows

Spot is extending the downside for the second session in a row on Monday, coming down to the 113.30/20 band after last week’s tops in the 115.60 region.

Market participants continue to unwind their USD-long positions against growing disappointment on the recent speech by US President Donald Trump. In fact, at his presidential inauguration, Trump delivered quite a protectionist message along with a lack of detail over his potential political/economic measures, particularly on the fiscal side.

In addition, the softer tone in US yields continues to fuel the downside mood around the buck, all resulting in the pair shedding more than 1% ahead of the opening bell in Euroland.

In the same line, speculative positioning remains supportive of the ongoing JPY strength, as net shorts have retreated to 4-week lows during the week ended on January 17, as showed by the latest CFTC report.

Data wise in Japan, the Leading Index dropped to 102.8 in November, while the Coincident Index ticked higher to 115.00 during the same period. There is no scheduled releases in the US calendar today.

USD/JPY levels to consider

As of writing the pair is losing 1.13% at 113.33 facing the next support at 112.55 (low Jan.18) ahead of 111.98 (38.2% Fibo of the November-December 2015 up move) and the 111.32 (low Nov.28). On the upside, a breakout of 113.97 (high Jan.23) would open the door 114.20 (55-day sma) and then 115.62 (high Jan.19).