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USD/JPY drops as European stocks suffer losses

FXStreet (Mumbai) - The bid tone on the safe haven Japanese Yen strengthened, pushing the USD/JPY pair to a low of 119.72 as the major European stock markets turned risk averse.

Bearish break on the cards?

The pair hit a fresh session low of 119.72, but still remains confined in a symmetrical triangle formation seen on the daily chart since mid September. The drop seen in Europe is mainly due to risk aversion in the European stock markets after the weak Chinese imports triggered concerns regarding the consumption/demand from the world’s second largest economy.

The prospects of a bearish break in the pair are high today, especially if the risk aversion worsens ahead, sending the US stocks lower.

USD/JPY Technical Levels

The immediate support is seen at 119.62 (Oct 8 low), under which the pair could drop to 119.05 (Sep 18 low) and 118.68 (Oct 2 low). On the higher side, resistance is seen at 120.00, followed by 120.22 (triangle resistance on the daily chart). Above 120.22, the pair could test offers at 120.56 (Oct 6 high).

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