USD/JPY drops back below 114, risk-off back in vogue?

The USD/JPY pair ran into fresh offers once again near 114.10 levels, knocking-off the rate back below 114 handle as markets turn risk-averse somewhat amid intensifying geo-political tensions between North Korea and the US.

Demand for the safe-haven yen returned to markets as investors run for cover, as Monday’s risk-off tone in the Asian equities looks to have resumed.

The major is on a retreat also on the back of fresh USD selling across the board, as markets continue to adopt ‘Sell the fact’ strategy, with the probability of a Fed rate hike next happening next week standing at 86.5% (nearly 90%). 

Looking ahead, nothing of note for the major in terms of economic events, and hence, risk trends and USD dynamics will continue to play a crucial role behind USD/JPY’s price action.

USD/JPY Technical levels to watch 

The major finds immediate resistance at 114.17/23 (Classic R1/ Fib R2). A break above the last, the major could test 114.77/78 (Mar 3 high/ classic R3) and 114.97/115 (Feb 15 high/ psychological levels) beyond the last. While to the downside, the immediate support is seen at 113.37/38 (20 & 10-DMA) next at 113.06/113 (Feb 16 low/ zero figure) and below that at 112.75/71 (Feb 20 & Mar 1 low).