Search ForexCrunch
  • Risk-off – key theme heading into Europe, as China slowdown fears weigh.
  • Displays bearish flag breakdown on daily sticks, further downside still play.
  • Focus on the US core PCE and BoJ policy outcome for fresh trading impetus.

Despite several attempts to regain the 112 handle in Asia, the USD/JPY extends its consolidation just below the last heading into the European markets.

The mixed trading on the Asian indices, as the China slowdown fears resurfaced and spooked the investors ´ moods, kept the safe-haven flows for the Yen underpinned while upbeat Japanese retail sales data also helped limit the losses in the domestic currency.

However, the spot continued to derive support from broad-based US dollar strength and markets preferred to hold the US currency in times of market panic and uncertainty. Also, better-than-expected US Q3 GDP figures also collaborated to the buoyant tone around the buck.

Looking ahead, the risk trends and USD dynamics will continue to play out until the release of the US core PCE data and the Wall Street open.

USD/JPY Technical levels

Omkar Godbole, FXStreet’s Analyst, offers key technical levels for trading the USD/JPY in the coming days.

Resistance

R1: 112.19 (lower edge of the flag)

R2: 112.44 (Friday’s high)

R3: 112.89 (Oct. 22 high)

Support

S1: 111.62 (Oct. 15 low)

S2: 111.38 (Friday’s low)

S3: 110.97 (200-day EMA)