US stocks lead to flight into the safety of the JPY
The USDJPY has been hit on the dollar weakness and also on the back of the sharp decline in the equity markets. The move has the USDJPY testing the lower extremes going back to June 10 (see green circles in the chart below). That area comes between the 122.42 and 122.60 level.
Earlier today, the price dipped below a two separate occasions only to bounce back. If the price moves back below the 122.42 level - and is able to stay below - that should open up the door for further selling and potential test of the lows reached earlier today at 122.08.
Holding support, and moving back above the 122.60 level should give the buyers some comfort that low is in place. Resistance comes in at 122.80 and at the underside of a downward sloping trendline that has slashed though the chart - defining bullish and bearish bias over the last 5 or so trading days. Today, the gap lower moved back below that line (blue circles). However, the corrections have found sellers near the line. That line currently comes in at 122.95.
