USD/JPY recover from 5-week lows as US stocks trim losses
|- Yen losses strength across the board as Wall Street moves off lows.
- USD/JPY back above 112.30, still with a bearish bias but pressure eased.
Risk aversion boosted the yen and pushed USD/JPY to 112.21, the lowest level since October 29. During the second half of the American session moved off lows and trimmed losses. The pair climbed back above 112.50, and it stands at 112.55.
The recovery took place as Wall Street indexes bounced. The Dow Jones is falling “just” 1.30% or 320 points (earlier today was down by more than 600). The improvement in risk sentiment weakened the yen in the market. Still, the Japanse currency is the top performer.
“The CFO of Chinese firm Huawei Technologies has been arrested in Canada and faces extradition to the US on possible violations of sanctions on Iran. The arrest has prompted outrage from China, potentially jeopardising progress in the ongoing trade spat”, wrote ANZ analyst. They point out that US data released today showed the economy remains strong, even as concerns mount over the outlook. On Friday, the NFP report will be released.
USD/JPY Technical levels
To the downside, the key support remains the 112.252/30 area: a daily close below would open the doors to more losses, exposing 112.00 and then 111.60. On the upside, the immediate resistance is the US session high at 112.60, followed by 112.85 and 113.15/20 (Dec 6 high).
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