The USD/JPY is falling sharply on Friday, having the worst day in months after fears over a new COVID-19 variant trigger sharp declines across financial markets. The pair is losing more than 200 pips, trading around 113.30/40, the lowest level since November 10.

The pair opened the slightly below 115.50 and near multi-year highs but then it started to move lower and accelerated again during US hours boosted by risk aversion.

In Wall Street, the Dow Jones is losing 2.60% and the Nasdaq 1.65%. In Europe main indices lost more than 3%. The announcement of travel restriction from Africa to Europe weighed damaged considerably market sentiment boosting the demand for safe-haven assets.

BULLISH AND BEARISH CONDITIONS/ POSSIBLITIES :

Fresh bearish acceleration weakened near-term structure, as daily studies show sharp loss of positive momentum, while stochastic reversed from overbought territory and heading south and the price fell below 5/10/20 DMA’s. Bears cracked initial Fibo support at 114.00 (23.6% of 109.11/115.51, unmasking key supports at 113.07 (Fibo 38.2%) and 112.72 (Nov 9 trough), break of which would generate reversal signal and further boost fresh bears.

Weekly chart shows long upper shadows on this and previous week’s candles that, in addition to recent multiple upside rejections, suggests that larger bulls may be running out of steam. Weekly close below 114.00 Fibo level is seen as initial requirement to keep fresh bears in play, with the situation likely to be boosted by rising uncertainty about the new virus variant.

This would also partially offset dollar’s positive stance on expectations of Fed accelerating stimulus tapering and earlier than expected rate hike.

King Dollar Near Major Support Zone 113.0

Nov 27 2021