USD/JPY drops back below 114.00, remains in range

• Continues to be unable to rally above 114.20.
• Turned to the downside during US session as yields drop.
• Still faces a critical barrier around 114.40/45.

The USD/JPY pair erased most of its gains and dropped below 114.00. It bottomed during the American session at 113.80, slightly above daily lows. 

The pair lost strength after rising to test the 114.30 area again and turned to the downside. It weakened further after falling below 114.00 (also the 20-hour moving average). The slide took place amid a retreat of the US Dollar Index. The DXY that was testing the 4-month high above 95.00, dropped back to 94.80. 

The yen gained ground during the last hours across the board and extended gains versus commodity currencies on the back of a decline in equity prices and amid falling US bond yields. The Dow Jones reached record highs earlier and at the moment of writing it was down 0.05%. The 10-year yield fell to 2.30% the lowest since October 19. 

USD/JPY levels to watch

To the upside, the area around 114.40/50 continues to be a key level. A close significantly on top could open the doors to further gains. Resistances levels on top might lie at 114.75 and 115.00. On the flip side, support might be seen at 113.50/60 (Nov lows), 113.20 (Oct 23 low) and 112.95 (Oct 31 low).