USD/JPY drops to test 104 handle as sentiment sours

The Japanese yen extends its recovery mode versus the American dollar as we progress towards mid-Asia, sending USD/JPY deeper into the red near 104 handle.

USD/JPY extends retreat from 105 barrier

The dollar-yen pair stalled its recent bull run just shy of 105 handle and came under renewed selling pressure this Wednesday, as the Japanese yen gathered significant pace after sentiment soured amid re-emerging concerns over South China sea dispute, while increased cautiousness ahead of the Chinese trade data also kept investors on the edge.

More so, the recovery in the Japanese currency also gained further traction following the release of comments from Japan’s official Suga, noting that ‘it’s not true that Govt is considering helicopter money.” At the time of writing, USD/JPY drops to 104.05, down -0.5% on the day, while Nikkei pares gains to now trade +1% higher near 16,250 points.

Markets now eagerly await the Chinese trade data for further momentum, while broader market sentiment will continue to play a key role amid a lack of significant fundamental drivers.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 104.75 (daily high). A break above the last, the major could test 103.12 (daily S1). While to the downside, the immediate support is seen at 102.64 (20-DMA) and below that at 102.75 (20-DMA).