USD/JPY is under pressure. On Friday, US stock indices closed lower. On top of the decline in oil prices, uncertainty over central-bank policies and Britain's June 23 European Union membership referendum aroused risk aversion in global markets. The Dow Jones Industrial Average dropped 0.7% to 17865, the S&P 500 fell 0.9% to 2096, and the Nasdaq Composite was down 1.3% to 4894.
European stocks were down over 2%.
US government bonds kept rallying, with the benchmark 10-year Treasury yield declining further to 1.639% from 1.678% Thursday. Meanwhile, yields on government debt in Germany, Japan and the UK reached all-time lows.
Nymex crude oil shed 3.0% to settle at $49.07 a barrel. Gold charged 0.4% higher to $1,274 a troy ounce, and silver added another 0.2% to land at $17.32 an ounce.
On the forex front, the British pound lost over 1% against the US dollar after a poll by ORB for the Independent newspaper showed that "Leave" would triumph over "Remain" in the EU membership referendum by 55% to 45%. GBP/USD plunged 1.4% to a seven-week low of 1.4256 (day-low at 1.4177). On Monday morning, the pair crossed below the 1.4200 level touching a low of 1.4156.
At the same time, EUR/USD was down 0.6% to 1.1249 on Friday. As a result, the Wall Street Journal Dollar Index gained 0.6%.
The Canadian dollar once surged to 1.2656 against the greenback in early trading hours on Friday, boosted by Canada's robust May jobs report. However, as oil prices continued their fall and capital flowed into safe-haven assets throughout the session, the loonie reversed its course to the downside. USD/CAD settled 0.5% higher at 1.2783. The pair failed to break above the resistance at 107.20 on Friday and reversed to the downside. Currently it is trading around the lower Bollinger band as those bands are widening, calling for an acceleration to the downside. Meanwhile, the intraday (30-minute chart) relative strength index is badly directed within the selling area between 50 and 30, suggesting downward momentum for the pair. The immediate support at 105.50 is in sight. Below that level, the pair could sink further toward the next support at 105.00.
Recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 105.50. A break of this target will move the pair further downwards to 105.00. The pivot point stands at 106.85. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 107.20 and the second one at 107.45.
Resistance levels: 107.20, 107.45, 107.95
Support levels: 105.50, 105.00, 104.50
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