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USD/JPY pares losses, retakes 120

FXStreet (Mumbai) - The Japanese yen seems to be losing ground versus the US dollar in the early moves, now lifting USD/JPY back near 120 handle, as markets gear up for the European open with the key event – Draghi’s testimony closely eyed.

Yen retreats from 119.64 highs

Currently, the USD/JPY pair trades -0.11% lower at 120.03, retreating from session lows of 119.64 struck in late-Asia. The major erased half its slide and extends the recovery this session as risk-off sentiment appears to have eased a bit, thus slightly favouring the USD bulls.

Markets now await the European opening bells for further incentives on the USD/JPY pair. Stocks on the European bourses are tipped off for a negative start tracking steel losses from their Asian counterparts. The pan-European Euro Stoxx 50 futures drop nearly 1% while the DAX futures remain deep in the red, down -0.85%.

Earlier in Asia, the Japanese yen bounced up against the US dollar after a weaker-than-expected Chinese manufacturing index reading boosted the demand for safe-haven assets.

Looking ahead, the pair is likely to remain pressured amid renewed bouts of risk-off trades as European traders digest the latest China PMI report.

USD/JPY Technical levels to consider

To the upside, the next resistance is located 120.32 (Today’s High) levels and above which it could extend 120.64 (Sept 22 High). To the downside immediate support might be located at 119.38 (Sept 15 Low) below that at 119.03 (Sept 18 Low) levels.

China: Disappointed data once again, manufacturing PMI sinks - TDS

Prashant Newnaha, Rates Strategist at TD Securities, notes that the Chinese data are just getting worse with the Flash Manufacturing PMI came in below expectations at 47, the lowest level since Mar 2009, vs mkt at 47.5 and TD at 49 with weak external demand the driver of the weaker headline.
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