USD/JPY feels the gravitational pull, hits 5-day low as S&P 500 futures drop 1.7%

• The Yen catches a bid due to worsening risk aversion.
• USD/JPY hit 5-day low.  
• S&P 500 futures are down 2.3 percent.

The Japanese Yen is surging as the drop in the Asian equities is feeding into the risk aversion in the US equities.

As of writing, the Shanghai Composite Index is down 1.86 percent and Hong Kong's Hang Seng index is down 3.6 percent. Meanwhile, Japan's Nikkei index has dropped 5 percent on the day, courtesy of broad-based risk aversion and the resulting Yen strength.

The S&P 500 index futures, which traded 0.2% higher in early Asia, are now down 2.3 percent. Clearly, the risk aversion is worsening and that seems to have put a bid under the Japanese Yen.

Consequently, the USD/JPY hit a 5-day low of 108.55 a few minutes ago. The spot could drop further below the recent low of 108.28 if the risk aversion hits European shores.

USD/JPY Technical Levels

A break below 108.28 (recent low) would open up downside towards 107.32 (September low) and 107.00 (psychological levels). On the other hand, a move above 109.00 (previous day's low) may yield a corrective rally towards 109.30 (session high) and 109.49 (23.6% Fib R of Jan. 8 high - Jan. 26 low).