It's all about the risk off mood ahead of European trading
Yen pairs are weighed lower today and continues to trade at the lows with risk sentiment still looking soft ahead of European markets open. Asian equities are weighed lower with the Nikkei down by 2.5% currently, with S&P 500 futures also down by 0.9%:
For USD/JPY, the pair trades near the lows now with price testing the 100-hour MA (red line) @ 112.50. Price tested the level yesterday but failed to hold a break under it but the tepid sentiment in equities kept any rallies in-check with the 113.00 handle proving a step too far for buyers.
If price falls below the 100-hour MA, the near-term bias becomes neutral from more bullish. Should that happen, keep an eye on a move towards the 200-hour MA (blue line) @ 112.31. If sellers hold a break below that, near-term bias turns more bearish instead.
But the key level I would be looking at today is the upwards sloping trendline that has helped support a move higher in the pair since March. The trendline has so far held on two previous occasions and today it sits around 112.05.
As long as price doesn't break below that, there is still reason to believe the market jitters seen at the start of today will abate over the next few sessions. The key area in the market to look out for today will be the US cash equity market, so until then expect the soft tones to prevail in European trading as long as E-minis stay subdued.
