Nikkei 225 looking for a foothold after declining on evaporating risk aversion

  • Ongoing political strife following Trump's firing of Tillerson has left the Nikkei on the low end.
  • Japanese political tensions are fading as markets move on from the risk associated with Abe's scandal.

The Nikkei 225 is struggling to regain its upward momentum after risk aversion took the equity index back down to support, and the Nikkei is now trading just beneath 21,700.0 heading into the end of the Asia market session.

Recent risk aversion in Asia markets spurred on by political scandal in Japan is beginning to ebb and the recent revelation that Japan's prime minister Shinzo Abe and finance minister Taro Aso forged documents involved in the sale of government land at a steep discount to a school operator with ties to Abe's wife has faded from market action. Risk aversion found a new plaything on Tuesday in Trump, who canned his own Secretary of State, Rex Tillerson, and headlines leaked that the US president is also aiming for a further $60B in trade tariffs aimed at China.

The Nikkei fell back to major support at the 21,600.0 level on Trump's antics but has managed to hold off on any further collapses. Despite a firm base in Japanese equities, recovering from January's decline in the face of market-wide inflation fears remains a distant target, high above at the 24,000.0 handle.

Nikkei 225 Technicals

Daily candles show the index struggling to gather momentum to continue a move upwards, and a decline from here could see support from the 50.0 Fibo level near 21,400.0, with a swing low at 21,250.0 providing further support. Resistance remains heavy from late February's swing highs at 22,100.0 and 22,460.0.

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