USD/JPY is turning downwards. Overnight, US stocks fell over 1% undermined by shares in the energy, materials as well as pharmaceutical biotechnology and life sciences sectors. Nymex crude oil dropped another 2.8% to $41.75 a barrel. The Dow Jones Industrial Average fell 1.4% to 17,448, the S&P 500 lost 1.4% to 2,045, while the Nasdaq Composite was down 1.2% to 5,005. Gold edged down 0.1% to $1,084 an ounce, and the benchmark 10-year Treasury yield eased to 2.313% from 2.343% in the previous session.
Meanwhile, the US dollar weakened against most other major currencies as investors kept seeking clues about the Federal Reserve's possible rate increase in December. The Wall Street Journal Dollar Index dropped 0.3% to 89.99. EUR/USD rose 0.7% to 1.0817, while USD/JPY was down 0.2% to 122.59.The pair broke below its previous key support and remains under pressure. Currently, it is capped by a declining trend line established in November 9. It stands below the 20-period intraday moving average (MA), which is below the 50-period one. And the intraday relative strength index (RSI) remains below the neutrality level at 50. The intraday outlook has turned bearish. The first downside target is set at 122.30; and the second one, at 122 (a base formed on November 6).
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 122.30. A break of that target will move the pair further downwards to 122. The pivot point stands at 123.05. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 123.40 and the second target at 123.60.
Resistance levels: 123.40 123.60 124
Support levels: 122 121.60 122.35