Daily Market Recap - USDJPY Crashes Below 3 Year L

Risk off sentiment carried over the weekend to dominate markets at the start of the week. Investors have been flocking to safe havens such as gold, US treasuries, and the Japanese yen. The move sent the USDJPY pair down below 3-year lows as markets grapple with sharp drop equities and oil prices.

The OPEC oil cartel failed to agree to a production cut over the weekend following Russias refusal to partake. This resulted in a dramatic collapse in oil prices as Saudi Arabia pledged to aggressively boost its output.

The US WTI crashed down to $27.34 per barrel as a consequence. Analysts suggest Russia is in favor of depressed oil prices as it will render US shale production too costly, providing a jab in the ongoing geopolitical tango between the two nations.

In the US stock market, the S&P fell approximately 7 percent at the opening bell, triggering a 15-minute pause in trading, the so-called circuit breaker. Although the major US indices recovered slightly after the immediate panic, they still closed significantly lower for the day.

Meanwhile, the USD remains under pressure as the US dollar index (DXY) is down 1.2 percent for the day, compounding the pressure on the USDJPY. On the technical front, the pair slid through the 3-year low on market open, towards the 101 marks, before stabilizing around the 102 handles.

Momentum is definitely skewed to the downside for the days to come as investors struggle to find common ground. Support will likely be felt at the 101-round figure, with immediate support at 101.751. Price action at the latter point will likely dictate the short-term range. The current upside target will be to close near the 104 marks, for a further push back above the 3-year lows around 104.50.

(Chart Source: Tradingview 09.03.2020)

Looking ahead, markets will remain driven by coronavirus fears. As European countries begin to take strong measures to contain the spread of the infection, economic activity will likely take a downturn. Traders will continue to be attracted to safe havens for the time being, benefiting the yen and gold the most.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.