###POV: USDJPY SET TO BREAK BELOW........>

DOLLAR-YEN: ###POV: USDJPY SET TO BREAK BELOW Y110?

-USDJPY has failed to build on positive market sentiment and could potentially

challenge the key Y110 area.

-Despite the passing of the US government shutdown and dovish Kuroda exit

remarks, the DXY at 3-year lows continues with the bearish trend.

-The correlation between USDJPY and the US 10y yield seems to be breaking down.

Whilst the spot rate has fallen 300+ pips, the US 10y has shown gains of +2.5%

in recent weeks.

-As political uncertainty continues momentum indicators point toward further

downside pressure with immediate focus on Y110.19, the 2018 low.

-LOOKING AHEAD: President Trump's first State of the Union Address is scheduled

for Jan30. Month-end flow is also expected to dictate price action next week

where previously USD selling has prevailed.

-USDJPY UPSIDE RISK: With the USD oversold traders remain cautious of a short

squeeze. Last week was the second consecutive week that USDJPY closed below the

previous week's low. This hasn't continued for a third week since Apr 2011.