USD/JPY: sharp correction
USD/JPY dropped on Thursday by more than 250 pips and touched 100.80, but later recovered slightly above the 101 mark. Japan’s Nikkei Stock Average sank by 7.3%, the biggest one-day plunge since March 2011, on fears that the US could begin to pare back its QE program. In addition, weak data from China also weighed on the Asian markets. Drop in Japanese stocks dampened risk appetite, turning investors to the relatively “safe” yen.
Given the today’s sharp move, we concede a deeper bearish correction in USD/JPY. However, the 100 hurdle for now is a firm support that won’t be broken at once. Daily close above 102.00 would eliminate the bearish pressure and open the way for further gains. Our next bullish targets are 103.80 and 105.00.
Chart. H4 USD/JPY