Dow Closes Down Over 3.25%, but USD/JPY is Only Down 0.45%

Joe Perry
By :  ,  US Market Analyst

As fears of a global slowdown and the possibility of a recession increase, equities sold off though out the day.  The Dow Jones Industrial Average closed down over 800 points, the biggest one-day selloff of the year.

After the DJIA retraced to the 61.8% Fibonacci retracement level from the July 31st high to the August 6th low, a flag pattern was formed.  Today prices broke lower out of the flag pattern and the index now has a possible target of 24,380 in its crosshairs. 

Source: Tradingview, FOREX.com

Typically, when equities have a “risk off” day, USD/JPY tends to follow Equity Indices lower.  However, today, while the Dow was down over 3.25%, USD/JPY was down only 0.44%! 

Source: Trading View, FOREX.com

In addition, while DJIA had an extremely bearish candle on the day, USD/JPY actually had an inside daily candle (which is neutral) and held support at 105.60!

Source: Trading View, FOREX.com

Is USD/JPY telling is that the move lower in DJIA was a bit overdone today?  That may be the case. Australian Employment data is due out later, which could act as a catalyst for a move.  If stocks bounce during Asia or Europe, watch for USD/JPY to move higher, and possibly at a faster pace, than stocks. 


Related tags: Wall Street

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