USD/JPY edges lower to mid-113s amid Russia probe

• USD/JPY drops to fresh daily lows at 113.36 on negative market sentiment.
• US Stocks turn red reflecting the risk-off mood.
• The 10-year US T-bond yield is down nearly 2%.

The USD/JPY pair came under a renewed selling pressure during the first half of the NA session and inched lower towards the bottom of its recent trading channel. As of writing, the pair is trading at 113.48, losing 0.18% on the day.

Political developments in the US push investors to safer assets

According to some fresh reports on Monday, Paul Manafort, a former campaign manager for Donald Trump, turned himself in to federal authorities in connection with the investigation of the Russian interference in last year's presidential election. The ongoing probe and the rising concerns over the political turmoil in the United States are thought to delay Trump administration's market-relevant plans such as the tax reform and the infrastructure overhaul. 

In the meantime, despite the falling US T-bond yields, the greenback remains resilient against its peers with the US Dollar Index turning flat around 94.70 in the last hour and not allowing the pair to push further lower for now. Today's data from the U.S. met the markets' expectations, keeping the December rate hike expectations near 97% according to the CME Group FedWatch Tool.

• US: Personal income increased $66.9 billion (0.4%) in September

Technical levels to consider

Despite today's fluctuations, the pair continues to trade in its week-old range, struggling to make a decisive move in either direction on Monday. Moreover, the RSI on the daily graph is moving sideways a little above the 40 mark, supporting the view of the short-term neutral outlook. On the downside, the pair could face the first technical support at 113 (psychological level/20-DMA) ahead of 112.30 (Oct. 19 high) and 111.40 (100-DMA/200-DMA). On the flip side, resistances align at 114 (psychological level), 114.45/50 (Oct. 27/Jul. 11 high) and 115.15 (Mar. 10 high).

• USD/JPY remains bullish, still targets 114.50 – UOB