- USD/JPY dips to fresh eight-month lows at 103.15.
- The post-election rally sends the US dollar tumbling.
- The USD might accelerate its downtrend below 103.07.
The US dollar has extended its downtrend against the Japanese yen on Friday to reach fresh eight-month lows at 103.15. The greenback has been hammered by the risk rally following the US election.
US dollar dives as stock markets surge
The USD/JPY is on course to a 1.15% depreciation this week, with stock markets posting their strongest weekly performance since April. The prospects of a Democrat government with a split congress where the Republicans can block initiatives to raise taxes or introduce tighter regulations have been welcomed by the investors with a risk rally, sending the safe-haven USD to multi-month lows against its main rivals.
On the macroeconomic side, the upbeat Non-Farm Payrolls report triggered an intra-day bullish reaction, pushing the pair up to 103.80, although the overall bearish bias prevailed, and the greenback returned near session lows.
According to the Labor Department, US private payrolls increased b 638,000 in October, beating market expectations of a 600,000 increment. Likewise, the unemployment level declined to 6.9% from 7.9% well beyond the 7.7% reading expected.
USD to accelerate its slump below 103.07
From a technical point of view, FXStreet’s Chief Analyst Valeria Bednarik sees the pair likely to accelerate its downtrend below 103.07: “The 4-hour chart shows that the USD/JPY pair keeps sliding below all of its moving averages, with the 20 SMA accelerating south below the larger ones. Technical indicators, in the meantime, resumed their declines after a modest corrective advance, back again in oversold levels. March 12 daily low at 103.07 is the immediate support level, with further declines expected on a break below it.”
Technical levels to watch
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