- The yen continues to strengthen on risk aversion.
- The dollar loses momentum after economic data.
- USD/JPY has worst day in months, down more than 200 pips.
The USD/JPY fails to find support and after losing 128.00 accelerated the decline. It is trading at the 127.50 area, at the lowest level since April 27. The pair is having the worst daily decline in months.
The pair’s sharp decline began hours ago in the face of a climate of widespread fear in financial markets, which increased the demand for safe-haven assets. This boosted government bonds. Lower yields gave the yen more strength throughout the market.
Wall Street can’t find any respite and after Wednesday’s lows, it is losing again with the S&P 500 down 1.45% and the Nasdaq down more than 2%. If these declines persist, the yen is expected to continue to strengthen.
The US economic data that was published has been in the background, in the context of strong declines in the stock markets. Unemployment subsidy requests showed two stories: initial ones at eleven-week highs and continued lows since 1970. Wholesale inflation rose in line with expectations, although the annual rate did not slow down as much as estimated.
The sharp decline in USD/JPY brought the price well below the 20-day moving average, which is at 128.80. It would be the first close below since mid-February. Should the declines extend, the next strong support can be seen at 126.90.
Technical levels
Source: Fx Street
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