USD/JPY erases daily gains amid risk aversion

• Equity prices failed to hold to gains in Wall Street. 
• USD/JPY rejected from above 109.00, drops to 108.50

The USD/JPY pair continued to slide during the American session and it was testing daily lows near the 108.50 support zone. 

Weakness in US stocks pushed the pair to the downside. The Dow Jones opened with strong gains and then turned negative. After falling to 23,630 rebounded to 24,000 but again was moving toward the lows on a volatile day equities in Wall Street. 

Risk aversion continues, not only to limit the upside, but also leaves weekly lows exposed. US markets are about to close the worst week since 2011. 

Levels to watch 

To the downside, the strong immediate support is the 108.50 zone, a break lower could clear the way to more losses, targeting 108.30 and then 108.00. On the upside, immediate resistance lies at 108.90 (20-hour moving average) followed by 109.30 (Feb 9 high) and the strong barrier at 109.70.