USD/JPY US election jitters with 48hrs to go

USD/JPY rallied to 104.53 in the early hours of Asia on on the back of the FBI news, although bears jumped on the opportunity to fade and price is testing the downside and 104 the figure in the Tokyo open.

We are seeing good two way business as the volatility starts to pick up with the US elections 48hrs away. The Yen and the VIX barometer are closely correlated and the Yen can be supported in times of high volatility, noting that of risk aversion made a four-month high last week already. However, the uncertainty was largely driven by the re-opening of investigations by the FBI into Hillary Clinton's email activity that drove speculation that her activity was illegal and had the potential to put her campaign in jeopardy, driving the Yen higher. 

However, FBI director, James Comey wrote a letter to Congress and said that FBI agents have been "working around the clock" to examine the new emails but "we have not changed our conclusions" when he was referring to the FBI's initial decision that Clinton had been careless, but not criminal.

USD/JPY levels

USD/JPY bulls had eyes for the 25th Oct highs through resistance at 104.80, but supply is taking the price through the 104.00 level with a Tokyo open ow of 103.96. However, the analysts at Commerzbank said, "Longer term, we suspect that the market is basing and target the 107.49 July high and the 200 day ma at 106.97 at this stage. The base would offer an additional upside measured target to approximately 109.50."  However, should the Yen accelerate, a break below the 200 sma on the 4hr sticks at 103.14 opens up the downside for a test of 102.50 and then the base of the cloud at 101.81as the next major key support area and a break there could open 100.41 as the  5-month support line.