USD/JPY plunges further on dollar pullback, stock market volatility

<p>USD/JPY plunged further on Friday to a new one-month low as the US dollar continued this week’s pullback, crude oil sustained its recent plummet, and […]</p>

USD/JPY plunged further on Friday to a new one-month low as the US dollar continued this week’s pullback, crude oil sustained its recent plummet, and global stock markets fell broadly ahead of next week’s US Federal Reserve policy meeting.

With the US dollar having taken a substantial beating since last week and stocks having taken a dive for the past several days, safe haven yen-buying has accelerated the fall for USD/JPY.

USD/JPY Daily Chart

 

This latest fall began early in the week, when the currency pair dropped below a key uptrend support line extending back to the mid-October lows. This drop was quickly extended to a breakdown below both the major 122.00 previous support level as well as a convergence of the 50-day and 200-day moving averages. Friday saw yet a further plunge that brought USD/JPY down to begin approaching the key 120.00 psychological support level.

Although much of next week’s expected Fed outcome may have already been priced into both the US dollar and the US equity markets, further volatility in stocks could lead to additional downside for USD/JPY. Any sustained breakdown next week below the noted 120.00 psychological level, could potentially pave the way towards a return back down to major support at the 118.00 level.

Any further fall, however, should be mitigated if the US dollar is able to regain some of its recently lost footing as the Fed potentially begins an ongoing monetary tightening cycle.

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