USD/JPY drops below 104.00 following a weaker Yuan fix

Dollar-Yen pair fell to a session low of 103.93 after The People’s Bank of China announced a lowest Yuan fix since 2010.

Hovers around 104.00

The spot was last seen trading around 104.00 levels. The currency pair clocked a high of session high of 104.37. Also note the pair has had a tough time last week holding gains above September high of 104.32.

A weaker Yuan fix usually leads to a weaker Aussie and also risk-off in the broader markets, thus leading to a stronger Yen. However, falling Yuan is no longer a surprise to the markets, given the currency is on a depreciating trend for almost a year now. Hence, the resulting reaction in the market is dull. Thus, the losses in the Dollar-Yen are being restricted around 104.00 levels.

Ahead in the day, stock market activity could guide the pair. Later in the day, US industrial production figures could influence the dollar demand.

USD/JPY Technical Levels

The immediate support is seen at 103.90 (5-DMA), under which losses could be extended to 103.63 (10-DMA). Next major support is seen at 103.23 (100-DMA). On the higher side, 104.32 (September high) is a major support, which if breached would open doors for a rally to 104.63 (Oct 13 high) and possibly to 105.00 levels.