The USDJPY currency pair, currently valued at 142.726, experiences a decline below the 142.50 level as market participants remain hesitant due to concerns about the downgrading of the US economy.

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• USD/JPY drops below 142.50 amid caution due to the US economy’s downgrade.

The pair currently trades last at 142.726.

The previous day high was 143.55 while the previous day low was 142.21. The daily 38.2% Fib levels comes at 143.04, expected to provide resistance. Similarly, the daily 61.8% fib level is at 142.72, expected to provide support.

The USD/JPY pair stretches downside below the crucial support of 142.50 in the London session. The asset faces significant pressure amid strength in the Japanese Yen as investors hope that the Bank of Japan (BoJ) would leave the support of a dovish interest rate policy sooner.

The US Dollar Index (DXY) consolidates in a narrow range above the crucial support of 102.00 as investors await United States employment data. According to the consensus, the US economy added fresh 189K private payrolls in July, significantly lower than the former release of 497K. Easing employment opportunities would convey a message that a tight labor market is releasing heat and the Federal Reserve (Fed) can consider keeping interest rates steady ahead.

The pace of job openings has already slowed down in the US economy as the ideology of switching jobs to get a quick hike is changing now knowing the fact that the labor cost index is reverting to mean. Overall market mood is quite cautious as emerging economies have come under pressure after Fitch downgrade the credit rating of the US economy to ‘AA+’ from ‘AAA’, citing that fiscal spending will elevate in forward years.

Meanwhile, S&P500 futures generate significant losses in Europe amid bearish market sentiment. The 10-year US Treasury yields have dropped to near 4.02%.

A significant fall in the USD/JPY pair amid consolidating US Dollar indicates strength in the Japanese Yen. Investors believe that after providing more flexibility to the Yield Curve Control (YCC), the Bank of Japan (BoJ) could look for scrapping the YCC as Japan’s industry mood is changing.

Technical Levels: Supports and Resistances

USDJPY currently trading at 142.65 at the time of writing. Pair opened at 143.33 and is trading with a change of -0.47 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 140.79, 50 SMA 141.13, 100 SMA @ 137.6 and 200 SMA @ 136.64.

The previous day high was 143.55 while the previous day low was 142.21. The daily 38.2% Fib levels comes at 143.04, expected to provide resistance. Similarly, the daily 61.8% fib level is at 142.72, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 142.51, 141.69, 141.18
• Pivot resistance is noted at 143.85, 144.37, 145.19

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