The Japanese currency extends its recovery mode from six-week lows against its American rival into a second day today, knocking-off USD/JPY sharply below 112 handle.
USD/JPY: Resilient to broad USD declines
After making several attempts to sustain above 112 handle, the spot finally gave into intensifying risk-off moods amid a slump in the Asian equities, especially with the Japanese benchmark index, the Nikkei 225 index sliding -1.15% to trade below 20k mark.
Moreover, broad based bearish consolidation seen in the US dollar also keeps the risks tilted to the downside, as the greenback looks vulnerable amid narrowing monetary policy divergences between the global central banks.
Meanwhile, downbeat Japanese data dump was largely ignored by the Yen, as risk-off flows continue to underpin the sentiment around the safe-haven Yen. Next of note for the major remains the US Core PCE index, personal spending and revised consumer sentiment data, which will offer fresh incentives to the prices.
USD/JPY Technical levels
According to Valeria Bednarik, Chief Analyst at FXStreet, “The pair trades around a major Fibonacci level, the 38.2% retracement of the April/May rally, with technical indicators now heading sharply lower around their mid-lines, coming straight from overbought levels. In the same chart, the 100 SMA advanced towards the 200 SMA, both around 110.90 now, a probable bearish target in the case of further declines. Support levels: 111.60 111.20 110.90 Resistance levels: 112.45 112.80 113.20.”