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USD/JPY bounces-off 113.00, but still vulnerable amid risk-aversion

  • Nikkei 225 index recovers losses.
  • USD, USTs selling stalls.
  • Yen buoyed by upbeat Japan’s GDP.
  • US CPI, retail sales data on tap.

The USD/JPY pair found buyers just ahead of 113 handle and from there embarked upon a tepid recovery mode, only to find sellers lurking near 113.25 region, capping further recovery attempts.

Nikkei 225 dropped -1.40%, risk-off at full steam

The spot witnessed aggressive selling pressure in the Asian trades and fell to a two-week low of 113.03, as a renewed risk-aversion wave gripped the markets amid tumbling Asian equities, especially the Japanese stocks, tracking the oil-price sell-off.

The declines in the pair were also on the back of resurgent JPY demand across the board, as the sentiment around the Yen was lifted on upbeat Japanese GDP figures and safe-haven flows.

However, over the last hours, the major is seen making recovery attempts, as the selling pressure behind the US dollar and Treasury yields appear to have eased, with markets awaiting the US CPI and retail sales data for fresh USD moves.

Meanwhile, the USD/JPY pair also recovers in tandem with the Nikkei 225 index, although the recovery appears short-lived amid ongoing concerns over the US tax reform plans, which could further fuel a sell-off in the US rates, in turn dragging the DXY southwards.  

All eyes now remain on the US CPI and retail sales data for near-term trading opportunities. In the meantime, the spot will remain at the mercy of the USD price-action and risk trends.

USD/JPY Levels to consider 

Jim Langlands at FX Charts noted: “On the topside, minor resistance now lies at 113.70 and at the session high of 113.90, ahead of 114.00 and the 9 Nov high of 114.06. Above here, unlikely today, could return to 114.35/45 and beyond, towards the 114.73, 6th Nov high, but above which could see a test of the descending trend resistance, currently at around 114.90. A break of 115.00 would then see little resistance until 115.20 and then 115.50.”


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