USD/JPY stays pressured to start the day, with price testing key trendline support at 108.87 currently
The yen is getting a bit of a reality check this week amid the tumble in risk sentiment, as USD/JPY has seen a dramatic fall from 112.00 to just below 109.00 currently.
With US Treasury 10-year yields hitting a record low and global equities entering correction mode, it has been hard for the yen not to go back to basics after its recent fall.
For USD/JPY, the momentum yesterday took it back under 110.00 and the continued risk aversion today is seeing price slip back below the 100-day MA (red line) @ 109.24 and testing key trendline support at 108.87.
A break below the latter will be a significant dent to buyers and opens up a potential move towards testing the 200-day MA (blue line) @ 108.41 next.
Looking ahead, it is hard to really go against the negative risk mood in the market especially with the weekend approaching. Nobody knows how the developments surrounding the coronavirus outbreak is going to be.
As such, risk aversion is still almost certainly going to be preferred by investors for the time being. That should keep the yen underpinned but just be mindful of some profit-taking activity in the risk selloff as well in the sessions ahead.
That may see some choppiness in trading conditions but I would still lean towards selling risk going into the two-day break on any major pullbacks today.
