USD/JPY slides amid risk-off move
|The Japanese yen has been trading on a firmer footing since the beginning of the week as the tensions between North Korea and the United States keep escalating. The Japanese currency, which is fulfilling completely its safe haven role, surged as much as 1.70% against the greenback since Monday, sending USD/JPY down to 108.91 as of Friday morning. The currency pair is currently testing a key support area that lies at around 108/109 (multi lows and 50% Fibonacci on June- December 2016 rally). A break to the downside will open the road towards 106.52 as a first step (61.8% Fibo), then the key psychological support at 100.
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From a technical standpoint, USD/JPY already failed to break the 108.84 support twice, there is therefore chances that the pair bounces back towards the 110. From a fundamental standpoint, the risk-off move is gaining traction across the globe, suggesting that the flight to safe haven is not done yet. Asian equities are down around 1.60% in average, while European ones are set to join the move. Volatility is surging with the VIX up to 16.21% and the VSTOXX hit 20.61% this morning. Therefore it would be a wise idea to wait out the storm before betting on a relief rally.
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