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  • USD/JPY is facing selling pressure, having faced  repeated rejection at a long-term average resistance.  
  • The anti-risk Yen is drawing bids, possibly due to the losses in Japanese equities.  

The USD/JPY pair is losing ground, as expected, having faced repeated rejection at key moving average resistance over the last few weeks.  

The pair is currently trading at 109.12, representing a 0.26% drop on the day, having hit a high of 109.48 in early Asia.  

Rejection at 100-week MA

The rally from August lows near 104.45 ran out of steam near the 100-week moving average in the last week of November. Since then, the dollar bulls have repeatedly failed to secure a weekly close above the long-term average, currently at 109.57.  

Markets often test dip demand following a repeated rejection at key levels.  

Hence, the pullback seen today is not surprising and could be extended further to sub-109.00 levels.  

Japanese stocks drop

The anti-risk Yen (JPY) is gaining ground amid the losses in the Japanese equity market.  

The Topix index is currently down nearly 0.5% and the Nikkei is shedding 0.56%. Stocks in Australia are also reporting a 0.5% drop.  

However, the futures on the S&P 500 are up 0.17% and indicate the US stocks are likely to extend the five-week winning streak.  

The Yen may run into offers in the early US session if the S&P 500 futures manage to keep gains. That said, a convincing break above the 100-week MA at 109.57 is needed to revive the bullish setup.  

Technical levels