USD/JPY: at a brink of breaking lower
|USD/JPY Current price: 112.32
- The USD/JPY pair is barely holding above an ascendant trend line coming from 111.62.
- US Treasury yields down on run to safety, weighing on the pair.
The USD/JPY pair fell to 112.14 early Europe, a continuation of the run to safety that begun overnight, with Asian markets collapsing and European indexes flirting with December 2016 lows at the opening. Safe-havens' demand has been triggered by political jitters across the EU and fueled by tensions between the US and Saudi Arabia following the killing of a Saudi journalist in Turkey. The strong demand for safety has taken down government bond yields, with the benchmark yield for the US 10-year note down to 3.14% after closing Monday at 3.19%. As European indexes bounce some from their lows, so does the pair, now trading around 112.30.
Bank of Japan Governor Kuroda was said to have expressed concerns about "nervous" moves in global stocks, not something that can actually move the market, but a clear sign that volatility has turned worrisome. There were no macroeconomic releases in Japan, and the US will only release minor figures, which will likely remain overshadowed by risk-related trading.
The pair is now trading a couple of pips above an ascendant trend line coming from last week's low at 111.62, after briefly falling below it. In the 4 hours chart, technical readings support additional declines ahead, as the pair is developing below all of its moving averages, which anyway lack directional strength, while indicators entered negative ground, the Momentum maintaining its downward slope, and the RSI directionless at 44. The pair has little reasons to regain the upside, but further declines will depend on equities' behavior. If Wall Street falls, the pair will likely retest the mentioned 111.60 low in the upcoming session.
Support levels: 112.15 111.85 111.60
Resistance levels: 112.60 113.00 113.45
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