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BUZZ-COMMENT-Dollar loses grounds vs yen global uncertainty fuels haven drive

Credit: REUTERS/THOMAS WHITE

The yen surged as global risk aversion put a premium on safe havens, leaving the dollar at risk of eventually losing the pivotal 104 level even though the U.S. currency was holding up better than the other majors.

Sept 21 (Reuters) - The yen surged as global risk aversion put a premium on safe havens, leaving the dollar at risk of eventually losing the pivotal 104 level even though the U.S. currency was holding up better than the other majors.

Besides March's pandemic driven plunge to 101.18, 2018 and 2019 lows were all in the 104.00s, so there's bigger downside risk if it breaks decisively.

USD/JPY is oversold, but the yen will remain in favor as long as the S&P 500 and other key equity indexes are falling. Resistance is by 105. A break below 104 would first target the 161.8% Fibo off August's high and the March 10 low at 101.95/2.02, with March's 101.18 spike low on EBS next.

Rising COVID-19 cases in the U.S. and Europe and U.S. political uncertainty regarding the November election and Supreme Court are fueling investor anxiety and dimming hopes for a pandemic relief bill from Congress.

Japan's new Prime Minister, Yoshihide Suga, may be unhappy about yen strength, but nothing more than verbal intervention is expected unless USD/JPY collapses below 2016's 99.00 low. The rebound from 104 will face sellers by August's 105.10/20 lows and the 105.15 tenkan. For more click on FXBUZ

Charthttps://tmsnrt.rs/35SrxNu

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(Randolph Donney is a Reuters market analyst. The views expressed are his own.)

((Randolph.donney@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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