- Fall in stock markets pushes down USD/JPY.
- The yen is also helped by rising Treasury bonds.
- USD/JPY ends bullish correction and could return to 128.00
The USD/JPY lost more than 50 pips in the last few hours as market sentiment deteriorated. The pair cut off the recovery and after failing to hold above 129.00 fell to 128.48, the lowest level since May 13th.
USD/JPY pullback comes as major Wall Street indices are in the red. The Dow Jones loses 1.36% and the Nasdaq 1.59%. On Tuesday, Walmart shares plummeted and today it is Target that has the worst day since 1987. In turn, Treasury bond yields changed direction after reaching maximum days and fell. The 10-year tranche yields 2.94%, and 30-year 3.14%.
The yen became the best performing currency in the new context after the opening of the US markets. Stocks are giving back Tuesday’s gains amid growing concerns about the global economic outlook.
Technically USD/JPY maintains negative momentum by continuing below 128.80. The next support can be located at 128.40 and 128.05 will follow below. Levels below 128.00 would be expected to lead to increased volatility.
A return above 129.05 would ease downside pressures. Resistance then appears at 129.40 ahead of 129.55 and weekly high at 129.75/80.
Technical levels
Source: Fx Street
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