It's one that's been coming
The past two weeks have been more of a case of a "will it, won't it" kind of situation for USD/JPY. The 105.00 handle has been a sticky one - particularly with large barrier options reported at the level, reportedly in excess of $10 billion.
But recent trade wars rhetoric and retaliation measures from China against the US, etc have really amplified the risk off sentiment and with equities taking a plunge, that's the straw that broke the camel's back.
Now that we've broken below 105.00, what does it mean?
The trade in the pair is still very much driven by risk sentiment at this point. Equities are still not doing well, although the aussie and Australian stocks are improved a little after the tariff exemptions here - but that's more of an isolated incident.
The bigger picture is still that of a trade war involving the two big guns, the US and China.
If USD/JPY manages to hold a daily close below 105.00, then it pretty much solidifies that another leg to the downside is coming. You can be picky about support levels around 103.17 and 102.55, but the momentum to the downside that has just been opened up will be a strong one.
Frankly, it wouldn't shock me to see the downside move extend to 101.20 or even 100.00 at this point.
