USD/JPY remains near session lows as treasury yield drop

The Dollar-Yen pair remains under pressure as the drop in the treasury yields is keeping the dollar bulls at bay.

The spot clocked a low of 116.30 earlier today and was last seen trading around 116.45 levels.

The 2-year treasury yield, which mimics short-term interest rate expectations, dropped two basis points on the back of the dovish Fed minutes. Moreover, the minutes confirmed what markets already knew i.e. the Fed would have a hard time raising rates three times in 2017.

Double top on the daily chart

The technical studies show the pair has formed a double top (118.60) formation with neckline support at 116.04.

Given the USD is on the back foot, the pair may target the neckline support. However, the breach of neckline support is contingent on the US ADP employment report and ISM non-manufacturing data due later today.

USD/JPY Technical Levels

A break below 116.04 (neckline support) would open the doors to 115.00. A daily close below the same would signal a top in place at 118.60 and could yield a sell-off to 114.82 (Dec 1 high). On the other hand, a break above 116.55 (Dec 19 low) would expose 117.00 (zero figure) and 117.43 (session high).