USD/JPY challenges 2018 lows near 105.30

• The pair trades closer to 2018 lows in the 105.30/20 band.
• Yields of the US 10-year note drop to daily lows around 2.83%.
• US likely to announce tariffs on Chinese imports worth $50/$60 billion.

The Japanese Yen is now gathered further traction vs. its American peer and is forcing USD/JPY to drop and challenge YTD lows in the 105.30/20 area.

USD/JPY weaker, risk aversion picks up

The pair is posting losses for the second straight session so far on Thursday, dropping to test the area of 105.30/20, where sits YTD lows and levels last traded in November 2016.

The down move came along the retracement of yields in the US-10 year note to fresh lows in the 2.82% neighbourhood – or 5 day lows - following yesterday’s ‘dovish hike’ by the Federal Reserve.

In addition, the higher demand for the safe haven currency has been backed by rising volatility tracked by the VIX index (‘panic index’), which climbed to 2-week peaks beyond the 20.00 milestone.

In the US data space, Initial Claims came in at 229K WoW, a tad above estimates, taking the 4-Week Average to 223.75K from 221.50K. Later in the session Markit will publish its advanced gauges of Manufacturing and Services PMIs.

USD/JPY levels to consider

As of writing the pair is losing 0.64% at 107.36 facing the next support at 105.25 (2018 low Mar.2) followed by 102.54 (low Nov.3 2016) and finally 101.15 (low Nov.9 2016). On the other hand, a breakout of 106.25 (10-day sma) would open the door to 106.37 (21-day sma) and then 106.64 (high Mar.21).