USD/JPY falls to test the 136.30/40 area amid lower US Treasury yields

• Japanese Yen rises across the board on American hours as stocks slide and bonds rise.
• DXY turns negative and extends losses toward 105.00.
• USD/JPY retreats after hitting weekly highs.

The USD/JPY broke below the 137.55 area and fell to 136.39, printing a fresh daily low. The pair is retreating from weekly highs amid a weaker US Dollar. It is trading modestly lower for the day, after rising for two consecutive days.

Data released on Wednesday, showed an increase in Unit Labor Cost in the US during the third quarter of 2.4%, below the 3.2% of markets consensus. Nonfarm Productivity rose by 0.8% surpassing expectations of an increase of 0.5%. On Thursday, Jobless Claims data is due and on Friday, the Producer Price Index. Next week, on Tuesday, is the Consumer Prices Index and on Wednesday the FOMC decision.

Equity prices in Wall Street are falling modestly, with the S&P 500 down 0.25%, on its way to the fifth decline in a row. At the same time, US yields are also lower. The 10-year Treasury bond yield stands at 3.44%, the lowest since mid-September.

The rally in Treasuries and the decline in equity prices are boosting the Japanese Yen which is among the top performers of the American session. On the contrary, the US Dollar is falling across the board. The DXY is down by 0.43%, approaching 105.00.

USD/JPY downside contained so far by 136.30

The decline in USD/JPY found support around 136.30, a relevant support. Below the 20-Simple Moving Average in four-hour charts emerges at 136.15. So a confirmation under 136.15 would point to more losses for the pair targeting initially 135.55.

The US Dollar needs to break and hold above 137.70/80 in order to open the doors to 138.00 and more.

Technical levels