USD/JPY drops below 104.00 handle

After struggling to extend momentum above 104.00 handle, the USD/JPY pair finally broke on the downside after disappointing release of Empire State Manufacturing Index.

The gauge for manufacturing activity in New York State unexpectedly dropped further into negative territory during the month of October and attracted fresh selling pressure around the greenback. Empire State Manufacturing Index dropped to -6.8 from -2.0 recorded in the previous month. Following the release, the pair ran through fresh offers and is now trading below 104.00 handle. 

Moreover, the prevalent cautious sentiment in global equity markets is further extending supporting the Japanese Yen’s safe-haven appeal and exerting additional selling pressure around the pair.

Next in focus would be Federal Reserve Governor Stanley Fischer's speech, which would be looked upon for fresh impetus during US trading session.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "the 1 hour chart shows that the price is above a horizontal 100 SMA, while technical indicators hover within negative territory, limiting chances of a stronger recovery.  In the 4 hours chart, however, the 100 SMA is slowly advancing above the 200 SMA far below the current level, while technical indicators are horizontal, but above their mid-lines. The pair needs to accelerate above the 104.40 resistance to be able to advance further this Monday, while below 103.80, the downward move can continue, particularly if upcoming US data disappoints."

"Support levels: 103.80 103.35 103.00
Resistance levels: 104.40 104.70 105.05"