USD/JPY: Nikkei -4% and Bears Target 106.00 Fibo Level
USD/JPY was stablising the downside with Japan back just for one day before further holiday's this week.
However,
Asian equities are smashed lower with the Nikkei opening by 3.5%
negative and continuing to over 4% as Tokyo gets going. USD/JPY has
recovered from the lows of 106.31, but the open has sent USD/JPY back
off the 106.73 highs and bears remain in control on broad dollar
weakness and in a continuation of the BoJ sell-off when the Bank
surprised and disappointed markets by not easing policy, despite cutting
its growth and inflation forecast. "With even currency warriors now
recognizing a high hurdle to intervention, there is little to prevent
additional yen strength," explained analysts at Brown Brothers Harriman
(BBH).
Key levels
"The dollar is tested
the JPY106.60 area before the weekend. It is a 38.2% replacement of the
Abenomics-induced rally, added the analysts at BBH. "Below there, many
have their sights set on JPY105, which some see potential inflection
point for potential BOJ intervention, and the 50% retracement target is
near JPY110.60...Nearby resistance is seen in the JPY107.70-JPY108.20
area. It may require a move above JPY109.50 to stabilize the tone."
