USD/JPY slammed to 109.70 post- Abe’s sales-tax decision

The USD/JPY pair plunged almost 80-pips in an immediate reaction to the Japanese PM Abe’s decision on sales tax hike postponement, while the Japanese stocks also fall sharply lower.

USD/JPY tests 20-DMA at 109.73

The Japanese yen jumped back on the bids and jolted higher versus its American counterpart in the last hour, despite Japan’s PM Abe announcement that he decided to delay the sales tax hike by 2.5 years, as markets took the decision as “Buy the rumour, Sell the fact.”

Moreover, mounting downward pressure on the Japanese stocks triggered a renewed risk-off wave and further strengthened the safe-haven yen. At the moment, USD/JPY slumps nearly-1% to fresh three-day lows of 109.66, while the Nikkei drops -1.73%.

Next in focus for the major remains the ISM manufacturing PMI report, while the persisting risk sentiment will continue to drive the yen markets.

USD/JPY Technical levels to watch

In terms of technicals, the immediate resistance is located at 111 (round number). A break above the last, the major could test 111.36/45 (April 5 & May 30 High). While to the downside, the immediate support is seen at 109.45 (May 27 Low) and below that at 109.27 (50-DMA).