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USD/JPY: drops sharply below 120 handle as bears take control

FXStreet (Guatemala) - USD/JPY is currently trading on the offer at 119.64 with a high of 120.03 and low of 119.57 at time of writing.

USD/JPY is playing out the downside in risk-off markets as uncertainties intensify and investors scramble to safe havens which have been bonds the euro and the Yen overnight while the European and US bourses finished negative again, while the Nikkei opens lower and weighs on USD/JPY.

USD/JPY downside opening up

Glencore was leading the way in the FTSE and Wall Street was following suit with a continuation in the bearishness in the Biotechnology and commodity sectors along with concerns over China while the Fed is also expected to raise rates this year.

USD/JPY will continue to be pressured on uncertainties and the divergence between the BoY and Fed. Analysts at ANZ summed up and explained, "In Japan, we see a number of factors culminating to signal a cyclical turn. An improving current account, a peak in the policy divergence between the BoJ and the Fed, as well as the rising importance of the JPY's safe haven status will all drive the JPY to strengthen from here."

USD/JPY levels

Technically, this sharp drop is exposing 119.30 (1 month support line) ahead of 118.75 to the downside and this is supported on the 4 hours chart with the price back below a bearish 20 SMA. The momentum indicators are also offering a bearish bias with room in the RSI at 40. Karen Jones, chief analyst at Commerzbank explained that below 119.30, they will target the 118.33 March low en route to the 116.15/115.85 2015 low and the recent low.

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