USD/JPY buyers survived a key test overnight despite the meltdown in equities
As US equities futures slumped earlier in the day, the pair touched a low of 111.82 and threatened a break of the upwards trendline support level seen since March this year. That continues to be a key technical level that is keeping the pair from breaking lower despite the slump in equities overnight.
And it will be a key level to watch out for in trading today as well. The key driver in sentiment here will be the performance of the US cash equity market later in the day. Asian stocks are trading lower but that's pretty much a given at this point seeing how poorly US stocks performed yesterday.
Should the trendline support give way, the next key support levels to eye for are the 100-day MA (red line) @ 111.55 and the May high @ 111.40. To be honest, I expected a heavier decline in yen pairs as US equities were routed yesterday but you can't argue with technical levels too. If it is that, it is that. Such is trading.
But looking over to the near-term chart, bias remains more bearish still as price holds below the two key hourly moving averages. And as long as equities sentiment remains tepid and price action doesn't break above those levels, sellers will still be poised to make a run to break below the key support level highlighted above later today.
