US Markets

BUZZ-COMMENT-Risk aversion comes to dollar's rescue vs yen

Credit: REUTERS/THOMAS WHITE

USD/JPY rose off the day's lows and further away from key support at 104 as dollar-funded reflation trades ran into profit-taking ahead of the weekend amid relief bill, election and pandemic uncertainties.

Oct 23 (Reuters) - USD/JPY rose off the day's lows and further away from key support at 104 as dollar-funded reflation trades ran into profit-taking ahead of the weekend amid relief bill , election and pandemic uncertainties.

This late London risk-off dollar lift followed reasonably upbeat U.S. Markit PMIs and an early yen slip against the euro and pound on Brexit progress hopes that was quickly unwound in the GBP/JPY's case.

USD/JPY, mired in a long-term downtrend, has again found support in the 104.00s. With the exception of March's pandemic panic spike down to 101.18, lows since 2018 have all been in the 104.00s. This week's 104.345 nadir breached the 76.4% Fibo of the 104.00-6.11 September-October recovery at 104.50 but must close below it to imperil the 104 base.

Thursday and today's highs by 104.93 are 50% Fibos of Wednesday's 105.25-4.345 plunge. The bigger hurdles are the tenkan, kijun and October lows, before Wednesday's break, by 105.05.

To reverse the string of lower lows and highs since March, USD/JPY should close above October's 106.11 high, now above the downtrend line from July and the daily cloud top at 105.79/88.

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Charthttps://tmsnrt.rs/2HsqwSr

Charthttps://tmsnrt.rs/37FTxoB

(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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