- JPY finds demand as a safe-haven in NA session.
- Nasdaq loses nearly 3% on Monday.
- Broad-based USD strength limits losses for the time being.
After advancing to its highest level in more than a month at 114.20 during the early trading hours of the European session, the USD/JPY reversed its course as the risk aversion boosted the demand for traditional safe-havens such as the JPY. With Wall Street falling sharply in the NA session, the pair extended its fall and was last seen trading at 113.70, losing 0.1% on a daily basis.
The USD strength dictated the pair’s price action in the first half of the day with the US Dollar Index surging to its highest level in 17 months at 97.58. Although there were no fundamental catalysts related to the greenback directly, the fact that both the euro and the British pound stayed under pressure amid ongoing political jitters helped the dollar outperform its peers.
However, with the risk sentiment deteriorating globally, the pair turned south and moved into the negative territory. Despite the low trading volume on Veterans Day holiday, major equity indexes in the U.S. started the day lower. Dragged lower by a more than 3% drop witnessed in the technology sector, the Nasdaq Composite lost as much as 2.9% in the session and was last seen down 2.6% on a daily basis. Additionally, the Dow Jones Industrial Average and the S&P 500 were losing 1.4% and 1.6%, respectively, as of writing.
There won’t be any macroeconomic data releases from Japan on Thursday and the risk perception is likely to remain as the primary driver of the pair’s price action.
Technical levels to consider
The pair could face the initial support at 113.55 (Nov. 8 low) ahead of 112.90 (20-DMA/50-DMA) and 112 (psychological level/100-DMA). On the upside, resistances are located at 114.20 (daily high), 114.55 (Oct. 3 high) and 115.00 (psychological level).
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