The U.S dollar remains under heavy selling pressure against the Japanese yen, with risk-off trading sentiment the prevalent market theme on Monday. The USDJPY pair trades close to the 111 handle, as Chinese stock markets continue to tumble, with credit yields also widening. On Friday we saw the pair slowly push towards and then rejected from the USDJPY 200-day moving average, signaling a lack of overall buying demand. We are likely to see full trading volumes return on Tuesday, as North American desks start to fully open.
The USDJPY pair is likely to remain under pressure while trading below the 111.72 level. Any upside attempts above 111.72, look likely to be capped by the 112.20 resistance level.
Should price action decline below the 111.07 technical level, intraday sellers may look to test the 110.66 level, with a possible deeper decline all the way towards 110.00.
