USD/JPY reverts gains, turns positive near 106.80

• The pair rebounds from earlier lows in the 106.30 region on Monday.
• US 10-year yields retreats to lows in the 2.85% area, 2-week lows.
• Fed’s J.Powell to testify before Congress on Tuesday, focus on monpol.

The offered bias is predominating the atmosphere around the greenback on Monday, dragging USD/JPY to as low as the 106.30 region, where it seems to have found some dip-buyers.

USD/JPY attention to Powell

The pair is looking to consolidate in the lower end of the recent range following Thursday’s sharp pullback, with decent support emerging in the 106.50/30 band for the time being.

The strong retracement from yields in the US 10-year note is also sustaining the pair’s downside. Yields have shed around 10 bps since last week’s multi-year peaks in the 2.96% area.

Later in the week, the pair should stay wary on the Humphrey-Hawking testimony by Chairman J.Powell due tomorrow, with the main focus on the normalization of the monetary policy and in light of the rising debate in the markets around 3 or 4 rate hikes this year.

On the positioning front, JPY speculative net shorts dropped to the lowest level since October 2017 during the week ended on February 20, according to the latest CFTC report.

USD/JPY levels to consider

As of writing the pair is up 0.03% at 106.82 and a breakout of 107.92 (high Feb.21) would expose 108.10 (21-day sma) and then 110.48 (high Feb.2). On the downside, the next support aligns at 106.38 (low Feb.26) seconded by 105.53 (2018 low Feb.16) and finally 102.54 (low Nov.3 2016).