USD/JPY drops further to the 109.70 zone amid lower US yields

• US dollar losses momentum during the American session.
• USD/JPY suffering worst decline in four weeks.

The USD/JPY pair dropped further during the American session and it is trading at 109.72, near September lows. The pair is making a sharp reversal after trading on Wednesday at weekly highs above 110.40.

The reversal took place amid a slide in US yields and a weaker greenback. The US 10-year yield hit earlier during the week 1.38% and currently stands at 1.31%. The DXY is falling 0.27%, under 92.50, ending a three-day winning streak.

Economic data from the US came in above expectation with a larger than expected decline in initial jobless claims to a fresh pandemic low. On Friday, the Producer Price Index is due.

Still sideways, now near lower bottom

The USD/JPY continues to be unable to move away from the 110.00 area. On Wednesday it looked ready to clear the way to more gains but the rally was followed by a reversal. Now the pair is about to test an uptrend line, near the 109.60 support area. A daily close clearly below 109.60 should leave the pair vulnerable to more losses. The next support stands around the 109.35 zone.

Technical levels