USD/JPY drops into 109.50 as risk aversion takes hold of markets

Greenback slipping as risk aversion boosts the JPY.
Mid-tier data for Thursday could buck the short-term technical trend.

Joshua Gibson FXStreet

The USD/JPY pair is back into 109.60 in the Asia session after continuing Wednesday's slide.

The US Dollar knocked lower against the Japanese Yen on Wednesday, and the slippage continues for today as risk aversion makes its way back into the markets. US President Donald Trump has ordered the US Department of Commerce to investigate foreign vehicle imports to the US, so that the Trump administration can levy a hefty 25% tariff on all foreign cars imported into the US, using the familiar Section 232 that allows the US to place tariffs on trade goods under 'national security concerns'.

Thursday is a fairly quiet showing for the USD/JPY pair, with Japan's Leading Economic Index for May (exp. 105.6, last 105.0) at 05:00 GMT, and US Jobless Claims at 12:30 GMT (exp. 1.754 million, last 1.707 million), followed by Home Sales for April at 14:00 GMT (exp. 5.57 million, last 5.60 million).

USD/JPY levels to watch

Souring risk appetite has seen the USD/JPY knocking back past Wednesday's lows near 109.55, and the major 110.00 handle is close to flipping from support back into resistance as the pair fumbles its position and falls away from the 200-day SMA, currently sitting at 110.16. As FXStreet's own Valeria Bednarik noted earlier, "technical indicators in the mentioned chart have managed to bounce from overbought levels, but are rather reflecting the ongoing correction than suggesting more gains ahead. Nevertheless, if the pair manages to extend its recovery beyond 110.45, May 15th high, chances are of further recoveries ahead for the upcoming sessions."

Support levels: 109.90 109.55 109.15

Resistance levels: 110.45 110.80 111.20

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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