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Forex pairs in this Article » USD/JPY (Athens) – The USD/JPY has been trading downwards today – having also opened with a large gap – as “risk – off” strikes back since the kick off of the early Asian trading session due mostly to the lack of budget on US budget impasse

USD/JPY tumbles on US fiscal issues “jitters”, amidst a long weekend

The USD/JPY opened with a lower gap the trading session and still trading on the downwards side amidst risk-off mood, inspired by the fact that US lawmakers failed to find a solution to the fiscal impasse during the weekend. Elsewhere, Nikkei in Japan as well as Hang Seng in Hong Kong are both closed for holiday today, which may bring thinner-than-usual liquidity conditions. The Japanese currency is currently gaining +0.30% against the greenback, dragging down the cross, as the risk-aversion mood is bolstering the safe-haven appeal status of the Japanese currency. Ahead of, there are also a lot of stop in the area as of 98.70-99.10, therefore if also being hit, the cross would probably move higher. Last but not least, the well known correlations are back; therefore the correlation between the Japanese currency index and the SP500 is approximately -0.81, therefore as long as SP500 futures continue the downtrend shift (today SP500 is trading sharply lower down 0.7%), traders should not find out-of the blue that the Japanese currency is outperforming across the board.

Technical Aspects on the USD/JPY

At the time of writing the cross is trading nearly 98.30, slightly above where the 50-daily MA lies (98.25), providing solid support. Furthermore, looking upwards we could see as a resistance the 98.50 area, where the 100-daily MA is being found. Karen Jones, Head Technical Analyst at Commerzbank mentions that “that the USD/JPY continues to see a strong rebound from its 200 day ma at 96.89. The market has eroded its short term resistance line and 55 day ma at 99.20 to reach the 50% retracement at 98.58. The move looks directional and while a challenge to the top of the recent range at 99.76/100.62 is plausible we look for this to hold - we neutralized our bullish outlook recently. Intraday dips will find minor support at 97.55 ahead of the 96.89 200 day ma. This guards the 95.70 5 month support line.”
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