USD/JPY headed to 105.50, stops triggered on a breach of 106.00

• DXY sell-off extends into Asia.
• Below monthly 200-SMA for the first time since Nov 2016.
• Focus shifts to the US data.

The bears tightened their grip in Asia, especially after the USD/JPY pair fell below the 106 handle for the first time since November 2016.

USD/JPY trades below all major DMAs

The offered tone behind the US dollar gathers pace on the final trading day of this week, accelerating the declines in the spot below a break of the critical 106 levels while a test of the 105 psychological support looks imminent after the pair fell below the monthly 200-SMA of 105.71 for the first time in 15 months.

The USD-dumping theme extends into Asia amid fears of a hard landing in the US amid fiscal worries and faster pace of Fed tightening. The USD index slumps -0.29% to print fresh 3-year lows of 88.19 last minutes.

Meanwhile, the Yen markets remain little affected by persisting risk-on trades, as the comments from Japan’s Finance Minister Aso on no Yen intervention needed combined with news that BoJ Kuroda is nominated for another term for the BoJ Governor, continue to keep the sentiment buoyant around the local currency.

The pair now awaits the US economic data releases due on the cards later on Friday for fresh trading impetus. In the meantime, the USD dynamics and risk trends will continue to influence the prices.

USD/JPY levels to watch

Jim Langlands at FX Charts, notes, “Below here (200 MMA at 105.70) would open the way to the 10 Nov 2016 low at 104.95, as well as the option barriers at 105.00. On the topside, minor resistance lies at 10650 and 106.85 ahead of 107.00 although this looks highly unlikely to be seen today.”