But now's still not the time to be catching the falling knife
The pair is lingering close to the 76.4 retracement level @ 106.92 now ahead of European trading and that will be a key support level to eye for in terms of a daily close should price action continue to trade around current levels later on.
However, given that we'll see more liquidity in the coming sessions I reckon we'll see added volatility to yen pairs to come so it's hard to rule anything out at this point. The low for today reached 104.87 and was close to test the 2018 low @ 104.56.
Other support levels towards the downside are the February 2018 low @ 105.55 and the 2 March 2018 low @ 105.25 and also the psychological barrier of the 105.00 handle. Those will also be key levels to look out for if price action starts heading back to the lows seen earlier today.
When something like this happens, fundamentals get thrown out the window. And the best a trader can do is to look at the technical levels to make a call. Sure, there are some aspects of fundamental analysis to have caused yen pairs to tip over the edge today but the accumulation of it all is something we already know over the past two months and it isn't something that will change overnight.
The only caveat is optimistic commentary surrounding the US-China trade dispute. That could help to relieve markets off some of the negative sentiment seen earlier today.
Otherwise, when you see a breakdown like this, it's hard to pick out a bottom but you can lean on the technical levels for some safety measure if you decide to counter-trade the trend. But I would advise only doing so if you are able to 'risk a little, to make more than a little'.
Right now, sellers are in firm control of USD/JPY and with a drop of almost 4% earlier today, the argument makes sense for one not to 'catch a falling knife' because you'd just get hurt at the end of the day.
