Monday, November 2, 2015

USD/JPY: Sellers in control, testing Friday’s low

FXStreet (Mumbai) - USD/JPY extends the drop for the second straight session on Monday, kick-starting the week on a weaker note, as the JPY bulls retain control amid China-PMIs fuelled risk-off sentiment across the financial markets.

USD/JPY extends decline below 1h 200-SMA at 120.58

Currently, the USD/JPY pair drops -0.23% to 120.34, having struck fresh session lows at 120.30 last minutes. The USD/JPY pair remains submerged into losses and now heads towards the major 50-DMA support located near 120.20 region as the widespread risk-aversion spurred by dismal Chinese PMI reports from both Markit and Caixin.

Although the latest Caixin China’s manufacturing beat estimates (47.5) and stood at 48.3 point towards, the report pointed towards weak aggregate demand in the world’s largest consumer.

Moreover, the recent series of poor economic data released from the US last week also continues to weigh heavily on the US dollar, and therefore, keeps USD/JPY undermined. The Fed’s favourite inflation gauge, Core PCE index came in at 0.1% versus 0.2% expected. While personal spending numbers also missed forecasts (0.1% vs. 0.2% exp.).

Looking ahead, the payrolls data from the US remains the main highlight, which will throw fresh light on Dec Fed rate hike chances. While for today, markets will watch a set of US PMI reports for further cues on the major.

USD/JPY Technical levels to watch

The prices remain capped below hourly 2500-SMA at 120.58, with the immediate support in sight located at 120.21/18 (Oct 23 Low & 50-DMA), below which 120 (round number) would be tested. While to the upside, USD/JPY would face stiff resistance near 120.60 region, above which the pair could test 121 handle.
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