USD/JPY drops below 100-DMA, approaches 111 handle
The USD/JPY pair came under a renewed selling pressure in the first trading hours of the American session and fell below the critical 100-DMA to refresh its lowest level since June 26 at 111.20. As of writing, the pair is trading at 111.26, losing 0.58% on the day.
Unabated USD weakness coupled with a low risk-appetite continues to weigh on the pair. The US Dollar Index, which has been hit by the political drama surrounding U.S. President Donald Trump, is having a difficult time recovering above the 94 mark as current developments keep the investors away from the greenback. According to a recent Reuters story, "the Russian lawyer who met Donald Trump Jr. after his father won the Republican nomination for the 2016 U.S. presidential election counted Russia's FSB security service among her clients for years, Russian court documents seen by Reuters show." Earlier in the day, Mark Corallo, Trump's outside legal team spokesman, resigned from his position in an emailed statement.
Major equity indexes in the U.S. started the day lower with the Dow Jones Industrial Average and S&P 500 losing nearly 0.3% at the moment. With an empty economic docket, political developments from the U.S. could continue to impact the pair's movements as investors seeking refuge could look to add to their long JPY positions.
- US stocks open weak, Nasdaq & S&P hold modest weekly gains
Technical outlook
Although short term indicators for the pair are showing oversold conditions, the pair could struggle to make a technical correction before the markets calm down. A weekly close below the 100-DMA could open the door for further losses towards 110.95 (Jun. 22 low), 110 (psychological level) and 109.10 (Jun. 7 low). On the upside, 111.45 (100-DMA) could be seen as the initial hurdle ahead of 112.10 (daily high) and 112.80 (200-DMA).
- USD/JPY downside corrective near term – Commerzbank