USD/JPY consolidates around mid-108s after a sharp 40-pips drop

  • USD/JPY stalls downside, as US dollar attempts a bounce.
  • Risk-on rally in equities and stock futures underpin.
  • A minor correction cannot be ruled out ahead of US data.

USD/JPY is consolidating a sharp correction from two-month highs of 108.85, as the bears lick wounds around the midpoint of the 108 handle.

The spot, currently, loses 0.12% to trade at 108.52, having hit a daily low of 108.43 in the last hour. An extension of the corrective mode to the downside cannot be ruled out in spot, given the upsurge following a technical breakout on Tuesday.

The ongoing optimism over the global economic recovery and the resultant risk-on rally in the equities emerged as the main driver for the recent rally in USD/JPY.

The bullish growth narrative combined with the technical breakout on the hourly chart helped the major breakthrough the two-week long-range trade.

However, the latest leg down in the pair could be likely associated to the relentless selling seen in the US dollar across the board, as the risk-on mood dampens the safe-haven appeal of the greenback.

Moreover, the yen picked up a small bid on the reports that the Bank of Japan (BOJ) is considering doubling the financial aid for the small business hit by the coronavirus pandemic, collaborating with the USD/JPY drop.

Over the last hour, the rates have stabilized amid a tepid bounce attempted by the greenback across its main competitors, with the US dollar index back above 97.50 from fresh three-month lows of 97.41.

Attention now turns towards the US ISM Services PMI and Factory Orders data for further incentives while risk trends will continue to have a major bearing on the spot.

USD/JPY technical levels to watch

To the downside, the next supports are aligned at 108.39 (200-DMA), 108.20 (former resistance) and 108.04 (5-DMA). Should the bulls regain poise, the two-month highs will be retested en route 109.00 (round number) and 109.14 (classic daily R1).

USD/JPY additional levels


Today last price 108.50
Today Daily Change -0.19
Today Daily Change % -0.17
Today daily open 108.68
Daily SMA20 107.39
Daily SMA50 107.67
Daily SMA100 108.33
Daily SMA200 108.38
Previous Daily High 108.77
Previous Daily Low 107.52
Previous Weekly High 107.95
Previous Weekly Low 107.08
Previous Monthly High 108.09
Previous Monthly Low 105.99
Daily Fibonacci 38.2% 108.29
Daily Fibonacci 61.8% 108
Daily Pivot Point S1 107.87
Daily Pivot Point S2 107.06
Daily Pivot Point S3 106.61
Daily Pivot Point R1 109.13
Daily Pivot Point R2 109.58
Daily Pivot Point R3 110.39



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