A tidal wave of risk aversion threatens to engulf financial markets as new coronavirus cases surge in the United States and Europe. On top of this, the US stimulus saga and uncertainty it presents continues to drain investor confidence – ultimately fuelling the risk-off vibe.

Our currency spotlight this week shines on the Japanese Yen which has been labelled a trader’s best friend in times of uncertainty. However, Yen bulls seem to be missing in action this morning despite the gloomy mood. Although the currency has weakened against most G10 majors excluding the Dollar, the Yen still has a shot at the throne if risk aversion intensifies ahead of the US election on November 3rd.

Focusing on the technicals, the return of risk aversion may present opportunities on various Yen crosses. Yesterday we covered the USDJPY on the weekly charts and identified key levels of support and resistance.

Our focus today will revolve around the daily timeframes and possible setups ahead of the US election.

USDJPY pressured below 105.00

For as long as the USDJPY is unable to break above the 105.00 resistance level, prices may decline back towards 104.00. Prices are trading below the 20 Simple Moving Average while the MACD trades to the downside. If investors rush towards the Yen’s safe embrace, this may accelerate the decline towards 104.00.

EURJPY on standby

One just can’t help but feel that the EURJPY is waiting for a directional catalyst. Prices are trading within a wide range with support at 123.00 and resistance around 125.00. A breakout/down could be around the corner with the fundamentals potentially sparking the move. Should the Yen gain on risk aversion, this may drag the EURJPY towards 123.00 and 122.40, respectively.

GBPJPY breakout/down setup in play

It’s the same old story on the GBPJPY. Support can be found at 135.70 and resistance may be found around 137.90. A breakout/down from these key levels may set the tone for the GBPJPY in the medium term. Technicals are slowing bending in favour of bears as the MACD trades to the downside while prices are struggling to keep above the 100 Simple Moving Average. If the 135.70 support is conquered, the next key level of interest may be found around 134.40.

AUDJPY finds comfort in lower range

The AUDJPY is rangebound on the daily charts. Sustained weakness below the pivotal 75.50 level may open the doors towards 74.00 and potentially 72.60. Alternatively, a move back above 75.50 could trigger a move towards 77.00 and 78.50.

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