USD/JPY: Downside consolidation around 101.00 amid risk-off

Risk-off sentiment remains the underlying key theme in Asia, capping USD/JPY’s every attempt to extend beyond 101 handle.

USD/JPY looks to test NY low at 100.84

Having stalled its overnight recovery at 101.25 levels, the USD/JPY pair drifted lower and now consolidates the steep drop witnessed in the last US session as risk-off trades re-emerged after the European banking sector concerns flared up and dragged the global equities sharply lower. At the time of writing, USD/JPY trades muted at 101.04, while the Japanese benchmark, the Nikkei 225 dives -1.40%.

Moreover, increased flight to safety also keeps the safe-haven currency yen underpinned, and hence, limits any upside attempt in the major. Meanwhile, weaker oil prices also add to the widespread risk-aversion and keep a lid on USD/JPY.

Calendar-wise, the Japanese CPI figures disappointed markets, while the BOJ Sept ‘Summary of Opinions’ also showed CPI on a declining trend. While markets shrugged-off a tad stronger Caixin Chinese manufacturing PMI data. Focus now shifts towards a fresh batch of US economic releases due later in the NA session.

USD/JPY Technical levels to watch 

In terms of technicals , the immediate resistance is located at 101.84 (weekly high). A break above the last, the major could test 102 (round figure) and 102.41 (Aug 29 high) beyond the last. While to the downside, the immediate support is seen at 100.84 (Sept 29 low), next at 100.70 (5-DMA) and below that at 100.50 (psychological levels).