USD/JPY dips below 108.00 as Treasury yields extend overnight losses

• USD/JPY is under pressure on softer treasury yields. 
• Trade tensions likely adding to bearish pressures. 

USD/JPY continues to lose altitude in Asia with the US Treasury yields extending overnight losses. 

The two-year yield, which tracks short-term interest rate expectations, fell 13 basis points to 1.81% on Wednesday, courtesy of dovish testimony by the US Federal Reserve President Jerome Powell. 

As a result, the US Dollar was offered across the board. The USD/JPY pair fell from 108.99 to 108.33 in the overnight trade and remains on the defensive at press time with the two-year yield reporting losses at 1.82%. The yield hit a low of 1.79% earlier today. 

As of writing, USD/JPY is trading at 107.95, representing 0.47% losses on the day. 

Apart from the weakness in the US yields, the pair is likely feeling the heat of US-China trade tensions. With Chinese President Xi refusing to make explicit commitments on purchasing American farm products, clouds have gathered over the new rounds of US-China trade talks. 

The pair may suffer a deeper drop during the day ahead if the equities turn red on trade concerns. 

Pivot points