Forex: USD/JPY, Asian shares slide as risk sentiment sours

FXstreet.com (San Francisco) - The Japanese yen is trading at its weekly highs against the US dollar this Thursday in Asia, underpinned by safe-haven demand as Asian markets sell-off on US fiscal cliff concerns and on European economy's negative growth outlook.

USDJPY has traded down retest the 79.75 support zone (overnight support) but bulls remain prepared to defend the mark. If the downward momentum persists and spot breaks lower, the 21-day EMA (79.60) offers next support; below there, the 79.45 level (Oct 18 high) would be the next bearish target.

"USDJPY is for me the clearest trade in the market, with most players long and bullish I think there is potential for a nasty stop-loss driven sell-off," says Sean Lee, founder of FXWW. "With a 5-wave up-move now complete, I think we could see a deep retracement towards stronger support levels near 78.65."

Worries about the fiscal crisis in the United States are weighing on Asian shares after Wall Street closed sharply lower. Japan's Nikkei was last quoted down 89.39 points, or 1% at 8,883.50; Australia's ASX is now down 34.46 points, or 0.8% at 4,482.00; Hong Kong is down 331.85 points, or 1.5% at 21,768.00.

USDJPY now exchanges 79.80.