USD/JPY is under pressure now. Overnight, the US stock indices lost over 1% despite a late-day rally. While oil prices returned to the levels below $30 a barrel, energy, materials, and financial shares became the biggest losers. The Dow Jones Industrial Average fell 1.1% to 16027, the S&P 500 dropped 1.4% to 1853, while the Nasdaq Composite was down 1.8% to 4283.
Nymex crude oil gave up a further 3.9% to $29.69 a barrel, gold gained another 1.3% to $1189 an ounce, while the benchmark 10-year Treasury yield plunged to 1.736% from 1.846% in the previous session.
Meanwhile, the US dollar reversed its rebound course and turned weaker against most other major currencies. The demand for safe-haven assets amid the stock sell-off drove the yen to its highest level against the greenback in over a year, with USD/JPY falling 0.9% to 115.84. EUR/USD increased 0.4% to 1.1195. At the same time, GBP/USD continued to decline down 0.5% to 1.4431, and USD/CAD edged up less than 0.1% to 1.3922. The pair reversed downward yesterday after a rebound had brought it up to 117.52. It traded along the lower Bollinger band and swiftly broke below the key support at 116.80. Currently, it is capped by the descending 20-period (30-minute chart) moving average, which stands below the 50 period one. The intraday relative strength index stays below the neutrality level of 50 lacking upward momentum. As long as such a bearish bias persists, the pair could decline toward the first downside target at 113.55, a 50% Fibonacci extrapolation drawn from yesterday's rebound higher. Key resistance is seen at 115.85.
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 113.55. A break of that target will move the pair further downwards to 113. The pivot point stands at 115.85. 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 116.50 and the second target at 117.
Resistance levels: 116.50, 117.00, 117.80
Support levels: 113.55, 113, 112.55