USD/JPY technical analysis: Slips below 106.00 tracking losses in S&P 500 futures

USD/JPY has dropped below 106.00, having faced rejection at the 200-hour moving average earlier today.
The pair has come under pressure, possibly due to the losses in the S&P 500 futures and heightened geopolitical tensions.

The USD/JPY pair is feeling the pull of gravity in Asia, possibly due to losses in the S&P 500 futures.

As of writing, the currency pair is trading at 105.86, representing 0.22% losses on the day. Notably, the pair has shed more than 20 pips in the last hour or so.

The anti-risk Japanese Yen seems to have picked up a bid, tracking the 0.45% drop in the futures on the S&P 500.

The risk-aversion could be associated with the heightened tensions in the South China Sea. The guided-missile destroyer USS Wayne E. Meyer reportedly entered South China Waters without China's permission.

In response, the Chinese People's Liberation Army has asked the US to immediately cease such provocative actions and has pledged to take all necessary measures to defend China's sovereignty.

Looking forward, the currency pair may drop further if the geopolitical tensions push Asian and European stocks lower.

Also, the Bank of Japan's Suzuki was out on the wires earlier today, warning about the negative effects of lowering rates further. Suzuki's comments could force markets to price out the prospects of more easing by the BOJ, leading to a rise in the JPY.

Technically speaking, the pair may find support at 105.59. A violation there would expose the 200-month moving average (MA), currently at 104.45.

On the higher side, a convincing break above the 200-hour MA at 106.17 is needed to weaken bearish pressures. The 200-hour MA has repeatedly capped upside since Aug. 26.

Hourly chart

Pivot points

1. R3 106.93
2. R2 106.58
3. R1 106.35
PP 106
1. S1 105.77
2. S2 105.42
3. S3 105.2

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.