- USD/JPY trades 0.32% lower and despite greenback strength in other areas, the pair can’t catch a break.
- Stocks are also lower on Tuesday and the pairs traditional correlation has broken down.
USD/JPY 4-hour chart
USD/JPY is trading lower on the session but it could be soo much worse. USD/JPY normally has a closer correlation with the stock markets but it seems that the move in the pair proceeded the move in stocks. Over the last week or so USD/JPY has been falling as safe-haven demand dominated. Now it seems we know why as the indices have fallen in dramatic fashion on Thursday.
Looking at this chart below, the market has paused for breath. The price has pulled back slightly and the indicators are moving away from extreme levels. The MACD histogram bars are getting smaller and the separation in the signal lines is also diminishing. The Relative Strength Index indicator is moving higher now and looks like it can penetrate the 30 line at some point soon too.
Overall the pair is still in a firm downtrend and this could be the pullback the bears are waiting for to come in again on the downside. The next resistance level is at the 107.00 psychological level so keep an eye on some selling pressure there.
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