Dollar yen rebounds from the intraday low of 119.25 to the key resistance line of 120.04 (+79 pips) in the morning session of Europe and NY as the equity markets recover from earlier losses stemming from lower commodity prices near multi-year lows amid concerns of an economic slowdown in China. The USDJPY made extended gains to 120.15 on short covering.
The USDJPY came under pressure on Monday on succesive yen buying interest as risk aversion followed the path of the falling stocks and commodities. The USDJPY rate fell steadily from yesterday's NY session high of 120.33 grinding its way lower to the intraday chart bottom of 119.25 in early Europe (06:20 GMT) (-108 pips).
The equities market fell yesterday led by the sharp decline of commodities to a 15-month low on talks of a commodity rout. The ripples from the troubled mining and trading giant, Glencore PLC have taken its toll in the market. Glencore has bounced by 10% today in Europe, but it is still down 51% from its Sept peak. Nikkei closed today -714 points at 16,930.84 (-4.05%) Euro Stoxx -0.25% at 3,031.79, FTSE -0.67% at 5,518.80 as of 14:50GMT.
Copper traded today up 0.3% on the day at $4,979, after trading to the 6 year low of $4,855.
The 14-day moving average fell from 120.25 to 119.45 and has bounced to the 119.80-85 level and holding for the timebeing. However, it is still vulerable to a repetition of another sell-off if the equities market fall again. Shortcovering retracement to 120.20-120.40 possible.
Chart: WorldWideMarkets Alpha Trader