USD/JPY: under pressure, following the lead of equities
|USD/JPY Current price: 110.76
- Sentiment, through equities behavior, leading the way for currencies.
- US political tensions maintaining risk aversion fueled.
The USD/JPY pair eases from Wednesday's high of 111.40, a level reached on the back of soaring US equities, now trading around 110.75, the 38.2% retracement of this year´s rally. The good mood among stocks' traders faded, as despite the Nikkei soared, European indexes opened with strong losses and remain in the red, with the DAX roughly 200 points down. Japan released overnight November housing data, with Housing Starts down 0.6% from a year earlier and Construction Orders for the same period decreasing by 10.7%.
Meanwhile, the US government partial shutdown goes on and so does the personal battle of US President Trump with the Fed's head Powell. Trump is not willing to sign a budget extension if he doesn't get the funding needed to build the wall, also against the Federal Reserve tightening monetary policy. In this scenario, the rally seen Wednesday in equities have no sustainability. The US will publish today weekly unemployment figures and November New Home Sales, nothing that can affect sentiment-related trading.
The short-term picture for the pair is bearish, given that, in the 4 hours chart, it is developing far below bearish 100 and 200 SMA while technical indicators faltered around their midlines, now heading lower within negative levels. Further declines expose the multi-month low reached this week at 110.13, with further slides possible on a break below the 110.00 figure.
Support levels: 110.40 110.15 109.80
Resistance levels: 111.05 111.40 111.75
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