USD/JPY slumps to 113.50, tracks the Nikkei 225 sell-off

Offered above 114 handle, falls nearly 50-pips.
Falls in tandem with the Nikkei 225 index.
China-US trade talks weigh.
US tax reform on tap.

Fresh buying interest seen in the Yen across the board amid a renewed risk-aversion wave, is seen pushing the USD/JPY pair towards the midpoint of 113 handle, having faced rejection just ahead of 114 levels.

Nikkei 225 plunges nearly 1000 points from 22-year tops

The sudden selling wave that gripped the USD/JPY pair is mainly on the back of comments from the Chinese President Xi, who talked up the prospects of boosting the country’s trade and imports with the US. Xi’s comments weighed heavily on the Japanese stocks, dragging the Nikkei 225 index sharply lower from multi-decade tops. The sell-off in the Japanese equities caught the markets off-guard and triggered risk-off moods, lifting the safe-haven Yen against its American counterpart.

More so, uncertainty around the US tax reforms also keeps the US dollar on the back foot, collaborating to the weakness in the spot. All eyes now remain on the US tax reform plan due to be unveiled later in the American morning. In the meantime, the pair will take cues from the broader market sentiment and US jobless claims release for fresh momentum.

USD/JPY Levels to consider

Jim Langlands at FX Charts noted: “On the downside, support will be seen at 113.50, below which could then head back to the session low, to the daily Kijun at 113.20 and then at the Fibo level at 112.95 although this seems unlikely today. If wrong, a sustained break of 113.00 would see us back in the previous 112/113 range, where 112.75 would be the first level of support ahead of 112.30. On the topside, minor resistance now lies at 114.00, above which could return to 114.35/45 and above, towards the 114.73, 6th Nov high, but above which could see a test of the descending trend resistance, currently at around 114.90. A break of 115.00 would then see little resistance until 115.20 and then 115.50.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.