USD/JPY holding its own just below 106 the figure in Tokyo's opening hour


  • USD/JPY holding the bid in Tokyo's opening hour and Nikkei 0.30% up.
  • The pair is not giving signs of a bearish extension, at the time being.

USD/JPY traders in Asia are soaking up the mood from overnight and sitting on their hands in choppy market conditions. USD/JPY is virtually unchanged on the session with a bearish tendency, albeit the Nikkei is opening with a bid, up 0.32% so far. 

USD/JPY is currently trading at 105.90 following a drift to the downside from the lofty heights of the 107 handle. European and US trade were both heavily risk-off following another poor data print from the eurozone and inverted yields in both the UK and US curve. 

"Eurozone July industrial production missed weak expectations on m/m basis (-1.6%m/m, est. -1.5%m/m), but data revisions meant that there was a sharp miss in the annual level at -2.6%y/y (est. -1.5%), with Eurostat citing weak capital goods production and highlighting weak production in Germany. This overshadowed the as expected Q2 Eurozone GDP (+0.2%q/q, +1.1%y/y). Q2 GDP in Germany (-0.1%q/q as est., +0.4%y/y vs est. +0.1%y/y) had minimal market impact," 

analysts at Westpac explained. 

As for yields, the focus was on US 2-10'year yield inversions. The US 2-year treasury yields fell from 1.66% early Sydney to 1.56%, the 10-year yield fell from 1.69% to 1.58% which was the lowest since 2016:

"The difference between the 2yr and 10yr rates is the smallest since 2006 (it briefly reached -2bp overnight – unnerving some investors who interpret such inversion as a signal of recession ahead). The 30-year bond yield tumbled from 2.16% to 2.02%. Markets are pricing 33bp of easing at the 19 September Fed meeting, and a terminal rate of 1.04% (Fed funds rate currently 2.13%),"

analysts at Westpac explained. 

US crash hard and USD/JPY responds in kind

Subsequently, the Dow Jones Industrial Average closed at session lows with the recession fears penetrating their way through and lost 800 points, or ended 3.1%, lower at 25,479. As for the S&P 500 index, it closed heavily in the red as well, down 2.9% at 2,841. The Nasdaq Composite Index dropped 3% lower to close at 7,773. Consequently, USD/JPY extended its Sydney session decline from 106.80 to a low of 105.66, the yen the best performer on the day.

USD/JPY levels

Valeria Bednarik, the Chief analyst at FXStreet explained that the USD/JPY pair recovered from a daily low of 105.64 but remains below 106.00 ahead of the Asian opening, hovering around 105.90:

"In the 4 hours chart, the decline stalled just above a now directionless 20 SMA, while technical indicators neared neutral levels from where they are currently bouncing. Despite the ongoing risk aversion, the pair is not giving signs of a bearish extension, at the time being, although chances of a recovery in the current scenario are quite unlikely. The daily low was set at 105.64, providing an immediate short-term support, and a break below it will likely result in additional slides toward the 105.00 figure."

USD/JPY

Overview
Today last price 105.93
Today Daily Change 0.02
Today Daily Change % 0.02
Today daily open 105.91
 
Trends
Daily SMA20 107.26
Daily SMA50 107.78
Daily SMA100 109.21
Daily SMA200 110.16
Levels
Previous Daily High 106.77
Previous Daily Low 105.65
Previous Weekly High 107.09
Previous Weekly Low 105.26
Previous Monthly High 109.01
Previous Monthly Low 107.21
Daily Fibonacci 38.2% 106.08
Daily Fibonacci 61.8% 106.34
Daily Pivot Point S1 105.45
Daily Pivot Point S2 104.99
Daily Pivot Point S3 104.33
Daily Pivot Point R1 106.57
Daily Pivot Point R2 107.23
Daily Pivot Point R3 107.69

 

 

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