USD/JPY drops sharply after N.Korea missile launch news

Eren Sengezer FXStreet

The USD/JPY pair came under a renewed pressure amid breaking news suggesting that North Korea launched a missile which may have landed in Japan's exclusive economic zone. At the moment, the pair is trading at 110.70, losing 0.5% on the day.

"North Korea fired a projectile that appeared to be a missile shortly before midnight Japan time on Friday, Japan's public broadcaster NHK said, citing government officials. Abe is convening an emergency meeting of officials," Reuters recently reported. The Pentagon also said that it had detected what it assesses was a ballistic missile launch from North Korea. Some fresh details on the incident suggest that it could be another ICBM as it flew for about 45 minutes.

Japanese Prime Minister Abe is now convening an emergency meeting of officials. If the developments surrounding the tension between Japan and North Korea force investors to seek refuge before they wrap up the week, safe havens like the JPY and the XAU could gather further strength against its rivals.

In the meantime, the US Dollar Index is having a difficult time recovering its losses and is now at 93.18, losing 0.64% on the day.

Technical levels to consider

A decisive break below 110.60 (6-week low) could open the door for further losses towards 110 (psychological level) and 109.60 (Jun. 12 low). On the upside, resistances could be seen at 111 (psychological level), 111.40 (100-DMA) and 112.35 (20-DMA).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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