The USD/JPY pair dropped further during the American session on the back of a slide of the US dollar across the board. It bottomed at 112.65, the weakest level since November 2.
From the lows bounced to the upside as equity prices in the US turned positive, weakening the demand for the yen in the market. The recovery from the lows found resistance below 113.00 and as of writing trades at 112.75/80, still facing bearish pressure.
The US Dollar Index (DXY) fell from levels on top of 97.00 to 96.45, hitting the lowest level in a week. US data offered no support to the greenback that was affected by comments from Fed’s Vice Chairman Richard Clarida, who warned about the impact of a global economic slowdown in its outlook. He added that the Fed policy was getting close to the “vicinity of neutral.
USD/JPY Levels to watch
On a weekly basis, USD/JPY is about to end with a loss of around a hundred pips. Just like it happened back in October, the pair failed to consolidate on top of 114.00 and pulled back. On a wider perspective, the greenback needs to post a weekly close above that level in order to open the doors to more gains.
In the short-term, if the pair extends the decline support levels could be seen at 112.55 (Nov 2 low / Oct 29 high), 112.25 (Oct 30 low) and 112.00. On the upside, resistance could be seen 112.90, followed by 113.10 (Nov 15 low) and 113.45.
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