USD/JPY turns negative as Nikkei retraces gains on Moritomo scandal

• Japanese stocks retrace gains on Moritomo scandal news.
• USD/JPY drops 40 pips from session highs.

Moritomo scandal got a new life on reports the Finance Ministry documents related to a questionable land deal have been doctored.

So the bid tone around the Japanese stocks weakened. As a result, Japan's benchmark index fell from 21,984 (session high) to 21,800 and pushed USD/JPY lower to 106.50.

The combination of blowout non-farm payrolls figure and dismal wage growth numbers saw the Dow rally more than 400 points. The risk reset put a bid under the USD/JPY, however, the political uncertainty in Japan seems to have played a spoilsport.

Ahead in the day, the spot remains at the mercy of the Moritomo scandal and market's appetite for the US dollars.

USD/JPY Technical Levels

A break below 106.39 (10-day moving average) would expose 106.00 (psychological support), under which a major support is seen at 105.25 (March 2 low). On the higher side, a move above 107.05 (Friday's high) would open doors for 107.91 (Feb. 21 high). A close higher would allow a stronger rally to 108.93 (descending 50-day moving average).