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  • The run toward safety turned into panic selling.
  • USD/JPY trading below 105.00 for the first time since the flash-crash.

The Japanese yen continues advancing as panic takes over the market, as dismissing the uncertain low from January’s flash crash, the pair hasn’t traded at these levels since November 2016. So far, the pair has posted a daily low of 104.44, now hovering in the 104.70 price zone.

Financial markets are in panic mode after the latest escalation of the trade war, as late Friday, the US announced that  the $250B of goods coming from China currently being taxed at 25%, will be taxed at 30%, while the remaining $300B of goods will now be taxed at 15% starting September 1st. Within the Jackson Hole Symposium and the G-7 meeting that took place during the weekend, US President Trump said that he was having “second thoughts” on the escalation of trade tensions with China, while his spokeswoman later clarified that the only thing Trump regrets is not having rose tariffs even more. Safe-haven assets are on the run, as the dollar plummets against most major rivals.

USD/JPY technical outlook

The pair has an unfilled gap at around 105.25 but will need to surpass 105.00, so far the daily high, to be able to close it. Still, technical readings indicate that the risk is skewed to the downside, as the pair retreated sharply from a bearish 20 DMA tested last Friday, while technical indicators head lower almost vertically within negative levels. If the mentioned daily low gives up, the next relevant support is 103.52, the monthly high from August 2016.