USD/JPY Drops Below 5-DMA as Nikkei Sinks Over 1%

USD/JPY Drops Below 5-DMA as Nikkei Sinks Over 1%

13 May 2016, 06:20
Roberto Jacobs

USD/JPY Drops Below 5-DMA as Nikkei Sinks Over 1%

The deterioration of risk conditions in the Asian trades this session provided the much-needed respite to the JPY bulls, now pushing USD/JPY further below 109 handle.

USD/JPY back below 109 handle

The dollar-yen pair once again met fresh supply near 109.50 levels on Thursday, and from there continues to extend lower, as the yen jumped back on the bids on increasing flight to safety amid widespread risk-aversion. At the moment, the USD/JPY pair drops -0.27% to fresh session lows of 108.73, depreciating sharply below a break of 5-DMA located at 108.79 levels. Meanwhile, the Japanese benchmark index, the Nikkei 225 drops further to 16,40 points, recording a -1.08% loss on the day.

Moreover, the major remains little affected by a broadly higher US dollar, as the USD bulls continue to cheer Fed official Rosengren’s hawkish comments, delivered in the US last session. Boston Fed President Eric Rosengren noted that the Fed should raise interest rates if data confirms a stronger jobs market and inflation outlook in the second quarter.

Next of note for major remains the US dataflow lined up for release later in the NA session, with main focus on the retail trade data.

USD/JPY Technical levels to watch

In terms of technicals, the immediate resistance is located at 109 (round number). A break above the last, the major could test 109.50 (psychological levels). While to the downside, the immediate support is seen at 108.65/50 (1h 100-SMA) and below that at 108.00 (round number).


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