Worries about recession are gaining momentum. Former Fed Gov. Dudley warned that the Fed may be too late and is pushing for a cut now (at the meeting next week). Earnings calls did have some warnings. LVMH, the European luxury retailer said:

Concerns about demand from Chinese consumers impacted other luxury stocks:
Sales in Asia (excluding Japan) fell 14%, raising concerns about Chinese luxury demand.

Tesla reported lower EPS for the quarter. Alphabet beat expectations but revenues from YouTube was lower than expectations. Share of Google or down -3.72% while shares of Tesla down -11.50%. The NASDAQ index is down -2.56%. The S&P index is down -1.69% and the Dow is down -1.00%

Looking at the USDJPY, if I were to spread the Fibonacci back to the December 2023 low, the price has now moved below the 38.2% retracement of the move up from that low. That level comes in at 153.654 and is also near the low from May 16 at 153.60. Stay below those levels is now close risk for traders as the trend lower continues.

The next downside target now comes in at 152.58 followed by a key swing area near 151.94 that corresponds with a ceiling between March and April, and was also a swing high going back to November 2023 (see red numbers on the chart below).

Also overnight, there was chatter that the Bank of Japan (BoJ) is considering a rate hike next week and has a detailed plan to halve its bond-buying in the coming years. The BoJ intends to taper its bond purchases gradually, in line with market consensus, to avoid any spike in yields. The decision on the rate hike in July is a close call, with the consumption outlook being a key factor; it’s described as a judgment call on whether to act now or later in the year. The BoJ sees no compelling reason to rush the decision, as price rises remain moderate and inflation expectations are stable.