USD/JPY slumps to 2-week lows below 113 ahead of US data
- Risk aversion on Friday helps JPY find demand.
- US Dollar Index drops below 97 mark.
- Coming up: Industrial production and Kansas Fed Manufacturing Index data from the US.
The USD/JPY extended its daily slide in the last hour as the weak risk appetite, as reflected by the sharp drop witnessed in the major European equity indexes, continued to help the safe-haven JPY find demand while greenback stayed under a bearish pressure. As of writing, the pair was trading at 112.90, losing 0.65% on a daily basis.
The ongoing political drama in the UK and the uncertainty surrounding the draft Brexit deal weighed on the market sentiment on Friday and the UK's FTSE 100 index lost nearly 1%. Additionally, Germany's DAX was last seen down 0.75% on the day.
On the other hand, the US Dollar Index, which failed to stay above the 97 mark earlier today, came under a renewed selling pressure following some cautious comments from Fed officials. In an interview with CNBC, Fed's Vice Chairman said that the Fed needed to factor global economic slowdown in its outlook and added that the Fed policy was getting close to the "vicinity of neutral." On the same note, Dallas Fed President Robert Kaplan warned that the weakening global growth could be a "little bit of headwind and may spill to the U.S."
Ahead of the industrial production and capacity utilization data, the US Dollar Index is down 0.56% on the day at 96.55.
Technical levels to consider
The pair could face the initial support at 112.65 (Nov. 2 low) ahead of 112.00/05 (psychological level/100-DMA) and 111.60 (Oct. 15 low). On the upside, resistances are located at 113 (50-DMA), 113.60 (daily high) and 114.20 (Nov. 12 high).
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.
