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USDJPY : Declining in Response to Falling 10 year Treasury Yields

USDJPY is today breaking down although no key data was released which could have caused this dip. Although currently the pair seems like experiencing support from the 100 day SMA. For those who don’t know why USDJPY is declining I want to discuss here one important point. First of all Japan is one of the largest foreign holder of US bonds. So whenever there is any change in yields we would see effects in this pair. When bond yields drop, Japan sells bonds to buy their currency Yen which is basically selling USDJPY. So we can say that there is a direct correlation between Yields and USDJPY. US 10 year yields have fallen to the lowest since July at 2.4661% down 4.5 basis.

On the 4 hour chart, the pair fell by breaking the support at 101.84 till it found support at 101.64 and at 50 day SMA. Breaking below which will open some selling opportunities.